SAN FRANCISCO — San Diego Mayor Jerry Sanders proposed a $1.1 billion fiscal 2011 general fund budget that would close a $28.2 million deficit.

California’s second-biggest city approved an extraordinary 18-month spending plan in December that closed a $179.1 million budget gap, but the additional $28.2 million budget gap opened in the ensuing months amid further declines in projected revenues and an increase in the city’s required pension contribution.

Sanders proposes closing the new gap with spending cuts of $11 million for vehicle fleets, $7.5 million for contracted services and capital outlays, and $3 million for retiree health care. He would close the remaining $6.7 million gap by restructuring payments on a legal settlement to delay payments.

The city’s decision to address most of the upcoming year’s budget gap last December meant that most of the “tough” budget decisions were made before this official budget announcement, Sanders said. “That’s the reason we can present a budget today that many of you may find uneventful.”

The city’s December budget plan remains at the heart of the new budget document. The plan closed the $179.1 million budget gap with $82.3 million of on-going solutions — primarily about 500 job cuts, but also some small revenue increases — and a larger $96.8 million of one-time solutions, such as interfund transfers.

Sanders reiterated his pledge to eliminate the city’s reliance on such one-time solutions to balance its budget. “Solving the structural deficit is of critical importance to our city’s financial health,” hesaid. “The council and I remain committed to creating a plan over the next 15 months to fix it.”

Sanders’ total all-funds budget proposal for 2011 is $2.85 billion. The $1.1 billion general fund is the single biggest fund and the most contentious area for policymakers. General fund revenues and expenditures would decrease by about 3% to $1.1 billion. The budget projects that tax revenues will be almost unchanged next year with a decrease of 0.1%.

The mayor’s budget would leave a $77.1 million reserve, which is 7% of operating expenditures. San Diego, which was hit by a pension disclosure scandal that locked it out of the public municipal bond market from 2004 to 2009, is working to rebuild its ratings, and so far has refused to touch its reserves during the recession.

That is in contrast to other big California cities like Los Angeles and San Francisco, which have dug deeply into reserves and still face projected budget deficits of a half billion dollars or more next year.

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