SF has gone from a $650 million deficit, to a $108 million surplus, and now back to a $728 million deficit, all in less than two years, and Mayor Breed is ordering department heads to slash their budgets ASAP.
Back in Year One of the COVID-19 pandemic, when no one was working and we were all sitting home terrified, the Chronicle reported that in December 2020, the city learned it “could face another $653.2 million deficit over the next two years.” But come Uncle Joe Biden’s gigantic 2021 stimulus package windfall, that turned into a $108 million surplus. Nothin’ but blue skies from now on, right?
Our two-year deficit is projected at $728 million - $200m next year & $528m the following year.— London Breed (@LondonBreed) December 16, 2022
This deficit is significant. While we can manage it and maintain core priorities like economic recovery, public safety, homelessness, and mental health, it won't be easy.
Guess again. The stimulus money was a mirage-y bandage on our budget woes, as KPIX reports, San Francisco is now looking at a $728 million deficit in the two-year budget. Or to be more precise, KPIX says it’s a “$200 million deficit in the first year and a $527 million deficit in the second year” of the coming budget cycle.
We’ve dealt with large deficits before, and I’m confident we can deal with this one - though it will require difficult tradeoffs and a hard look at which programs are delivering results for our residents.— London Breed (@LondonBreed) December 16, 2022
It’s not as if the city is broke, and frankly, plenty of cities would trade fiscal places with us in a second. “This is out of an annual general fund budget of approximately $6.8 billion,” as Breed's office explains in a lengthy statement that is far more detailed than the tweets embedded in this post. “The shortfall is the result of slowed revenue growth, specifically the City’s largest tax revenues that include property and business tax, and loss of temporary federal COVID-19 funding.”
So some perspective; a $728 million deficit sounds (and is!) big, but when you’re sitting on a $6.8 billion general fund, it’s not existential crisis territory. But certainly some belt-tightening is going to be required.
We must maintain our core priorities, including hiring for vacant positions for key services. We still need police officers, 911 dispatchers, nurses, street cleaners, and others who are doing the work to address our city’s major challenges.— London Breed (@LondonBreed) December 16, 2022
“To help address this shortfall, the Mayor instructed departments to propose reductions of approximately 5% in the first year and 8% in the second year from their General Fund budgets,” the Mayor’s Office statement continues. “Additionally, she directed department heads to prioritize filling vacant positions for core City services that will support San Francisco’s recovery.”
Going forward, we must continue to focus on our Downtown recovery. That means working with our business community to attract and retain companies and new industries. It means looking at fees and incentives and focusing on public safety. Everything is on the table.— London Breed (@LondonBreed) December 16, 2022
The Mayor’s Office adds that we have not seen a deficit of larger than $600 million “since around the time of the Great Recession over a decade ago.” And we got through that one. Still, fair or unfair, Breed’s opponents will indeed jump on how she “blew a $100 million surplus.” But Breed is not up for reelection until 2024, the end of this budget cycle (ironically, thanks to Supervisor Dean Preston). So she may be able to bill herself in a reelection campaign as the mayor who solved a $728 million deficit.
Image: @SFCity_Hall via Twitter