🎯 STRisker: Bulletin - San Diego, CA
San Diego’s Budget Crunch Puts Short-Term Rentals Squarely in the Tax Spotlight
Short-Term Rentals Caught in the Middle of San Diego’s Budget Battle
As San Diego’s city and county governments confront serious budget shortfalls, short-term rentals are increasingly being viewed as part of the solution or at least a place to look for new money. With deficits climbing and federal support becoming less reliable, local leaders are floating a range of tax increases, including a potentially costly new tax on short-term vacation rentals.
The City of San Diego faces a budget gap estimated at several hundred million dollars, while the County of San Diego may be dealing with a $300 million shortfall tied largely to federal cuts in health and social services. Cutting services is widely seen as politically and economically risky, leaving new revenue measures as the primary option on the table.
Q: "Is retrenchment ahead for San Diego?"
— SDCTA (@sdcta) January 4, 2026
A: If by 'retrenchment' you mean 'multiple tax increases', then yes.
There are four proposed 2026 City or County of #San Diego new or increased taxes mentioned in this column:
1. 1% city sales tax hike
2. 0.5% county sales tax hike… pic.twitter.com/FkzirruEx6
Among those measures is a proposal from City Councilmember Sean Elo-Rivera to tax short-term vacation rentals at levels that could reach thousands of dollars per room. The proposal, which also includes a tax on second homes not used as long-term rentals, advanced through a council committee in October, signaling growing momentum though the final structure has yet to be decided.
For hosts and property owners, the proposal represents a potential shift from incremental regulation to a more aggressive financial approach. A high per-room tax could reshape the economics of short-term rentals in San Diego, particularly for professionally managed properties or homes with multiple rentable units. Even well-performing listings could feel pressure if fixed annual costs rise sharply.
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This discussion is unfolding alongside other major tax proposals, including separate city and county sales tax increases backed by labor unions. With so many ideas circulating, there’s concern that voters could feel overwhelmed or reject multiple measures outright. In that context, a targeted short-term rental tax may be framed as a way to raise funds without broadly increasing costs for all residents.
While no final decision has been made, the message from City Hall is clear: short-term rentals are no longer just a housing or tourism issue, they’re a budget strategy. As San Diego moves closer to potential ballot measures, hosts and stakeholders will want to stay engaged, because the financial rules of operating in the city could soon change in a big way.
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