Escondido projects $38.5 million from Measure I but warns long-term structural deficit remains

Christina Holmes, Escondido's director of finance, presented the city's operating-budget outlook at a budget workshop and said the first-year revenue from Measure I will help the general fund but won't erase a long-term structural gap.

Holmes summarized the Measure I projection and the reasoning behind the staff recommendation: two consulting firms produced different capture-rate forecastsHDL estimated about $35 million (roughly 77% of base capture), while Avenue Insights projected about $41 million (about 92%). "The staff recommendation was to budget for revenue of $38,484,150," she said, noting that figure is the midpoint between the models.

Why it matters: the city has run an ongoing general-fund structural deficit for years, Holmes said. Under current assumptions, annual deficits are projected to exceed $6 million and grow to about $27 million by fiscal year 2043. The forecast assumes moderate revenue growth and does not model an economic recession or additional service expansions.

Holmes emphasized that first-year Measure I receipts are uncertain because voter-approved district taxes use a destination-based allocation (tax follows the buyer) rather than the city's base 1% local allocation, which is place-of-sale based. She also noted sectoral differences in capture: typical retailers and restaurants should generate proportional district revenue, while auto dealerships may under-capture in the first year because only vehicles registered in Escondido will be assessed the district tax.

City staff listed actions taken to limit costs, including eliminating more than 100 full-time positions between 2008 and 2022, shifting a larger share of pension and benefit costs to employees, deferring maintenance across parks and facilities, and using more than $11 million a year in reserves and one-time funds. Holmes said Measure I funds will be used to restore or add several staff positions and support essential services, but she cautioned the Measure is not a complete fix for the structural gap.

The presentation also noted governance and transparency measures: the council appointed members to a citizens' oversight committee to monitor Measure I spending, and the city received its first Measure I distribution at the end of June 2025.

Next steps: staff recommended the $38,484,150 Measure I revenue assumption for the current budget and will continue monitoring actual receipts as destination-based allocations settle. The city expects budget adoption by the statutory June deadline and said it will present updated forecasts as new data arrive.