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On September 18, 2007 the City Council, with support from Mayor Sanders, voted 5-3 to endorse a pending lawsuit before the California Supreme Court to overturn Proposition 22, which banned same-sex marriage in California. Proposition 22 was supported by 62 percent of San Diego voters.[92] Proposition 22 was later ruled unconstitutional by the California supreme court. In 2008 California voters passed Proposition 8 to change the California constitution to match the wording of Proposition 22 defining marriage as only being valid or recognized between a man and a woman. Approval for Prop 8 received 53.7% of the votes in San Diego County.[93] Disapproval for Prop 8 received 54.1% of the votes in the city of San Diego itself.[94] In a surprise move, the conservative Republican Mayor Jerry Sanders publicly reversed his stance declaring support for same sex marriage in July 2008. In a tearful speech, the Mayor vowed he would support his gay daughter Lisa Sanders in her fight against Proposition 8, and that he "he just couldn't tell her she did not have the right to get married", mere hours before he was expected to veto a City Council motion supporting same sex marriage.[95] This is most notable as it signified one of the most prominent conservative public figures to oppose Proposition 8.

A series of financial scandals has rocked the city in recent years. A 2002 scheme to underfund pensions for city employees, the San Diego pension scandal, led to the resignation of newly elected Mayor Dick Murphy[96] and to the filing of criminal charges against six pension board members.[97] Those charges were finally dismissed by a federal judge in 2010.[98] In an unrelated scandal, two city council members, Ralph Inzunza and deputy mayor Michael Zucchet—who was to take Murphy's place—were convicted of extortion, wire fraud, and conspiracy to commit wire fraud for taking campaign contributions from a strip club owner and his associates, allegedly in exchange for trying to repeal the city's "no touch" laws at strip clubs. Both subsequently resigned. The judge later set aside (overturned) the conviction in Zucchet's case

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