Despite a flush local economy and real estate prices that leave locals flushed, the City of San Francisco faces a nearly $100 million budget deficit, approximately 42 percent of which comes from the price of pensions according to a Chronicle estimate. That deficit, amidst a total budget of roughly $9 billion, puts Mayor Ed Lee in the unenviable position of decreeing budget cuts across the board, calling on city departments to reduce their spending by 1.5 percent apiece according to the Examiner.
Further measures in the same amount are proposed for next year, making for a combined three percent spending cut across 2016-17 that represents a San Franciscan irony impossible for anyone to miss, even those beneath the gilded roof of City Hall. The cuts are "roughly equivalent to the citywide impact of the increased pension costs that is now projected in each of the next two fiscal years," stated the Mayor's office.
As the Business Times observed, one important backdrop is Prop C, Ed Lee's 2011 pension reform measure approved by voters. Though it might appear otherwise, “pension reform is working,” insisted Lee spokesperson Christine Falvey. “There are some unanticipated issues that came up, so the mayor is dealing with those now with cuts.” Unanticipated at least as of December 2014, when the Mayor's office instructed city departments to propose no cuts amid a projected deficit of $15.9 million for the current fiscal year.
In addition to pensions, one-time cost saving measures poised to sunset are cited as contributing to the current deficit projections. Departments also have the options of exploring legislation to make for their own savings or else increase revenue on their own terms, or perhaps both, to account for the value of the cuts. “The City’s financial outlook remains positive, though the budget still needs corrective actions," a City statement concluded.