Mayor London Breed’s final fiscal update of her tenure in office shows a budget deficit that’s nearly $100 million higher than it was projected to be just four months ago, and the Trump administration seems likely to yank some already-promised federal funding.
It is probably not Mayor London Breed’s fault that the City and County of San Francisco yo-yoed back into deficit times coming out of the pandemic. Her sweeping COVID shutdowns had the desired effect of giving San Francisco an exceptionally low COVID death rate. But we still have the lingering hangovers of very high office vacancy (which is not just a San Francisco thing, people), and troubles in the tourism industry that are making for much lower tax revenue. Meanwhile, there are a series of city employee pay raises and business tax cuts that were largely approved by voters.
The Chronicle reported Tuesday that the city’s budget deficit has now swelled to $876 million. Just four months ago, KQED projected the deficit was around $789 million, so that’s an additional $87 million in red ink compared to what we last knew. And it’s going to be Daniel Lurie’s problem now, as he’ll be sworn in as mayor in a little over a month.
“It’s hard. I don’t envy his challenge,” former city controller Ed Harrington told the Chronicle. “It’s like turning a battleship or an aircraft carrier.”
Even amidst an unprecedented budget deficit, some things are untouchable. SF’s cherished cable cars are integral to our history and attract visitors who fill hotels, restaurants, and bars. Our iconic cable cars play a role in our economic recovery, and they’re here to stay.
— Daniel Lurie 丹尼爾·羅偉 (@DanielLurie) December 2, 2024
So what’s Lurie going to do to balance the budget, if that’s even possible? Before he’s even left the gate, he said on Twitter Monday that he would not eliminate the cable cars, which the SFMTA has said they were considering doing to save money.
But Lurie was a little less specific on Tuesday in a statement he issued after the $876 million figure became public.
“The budget deficit is a crisis that we must face head-on, and it will require us to make difficult decisions,” Lurie said in that statement. “We can’t simply cut our way out of this nor can we balance the budget on the backs of working people. We need to stop spending more than we can afford while prioritizing investments that are critical to a full economic recovery and the maintenance of essential services. Beyond living within our means, fostering a diverse and growing economy is critical to eliminating chronic budget deficits. This moment requires all of us to work together to advance the best interests of San Franciscans.”
One reason the deficit is larger than anticipated, as the Chronicle points out, is that the city spent $244 in pandemic response costs that the Federal Emergency Management Agency (FEMA) said they would reimburse us for. They have not reimbursed that yet! With Trump coming into office with a Republican-controlled Congress, it seems unlikely we will ever get those funds reimbursed — though somebody could hurry up and maybe yank that money in the next six weeks.
As NBC Bay Area notes, “San Francisco’s budget deficit could grow to $1 billion if the new administration withholds that federal funding.”
Yes, Daniel Lurie is a wealthy man, but that’s family wealth money. Lurie is rich, but he’s never run a business, so he would not have the kind of deficit-cutting bona fides of a Michael Bloomberg type. Lurie may have some idea of how he’s going to get San Francisco out of an $876 million hole, but he’s never done anything remotely resembling actually getting out of an $876 million hole. So we'll see.
Related: Supervisors Up In Arms Over Breed’s Massive Budget Cuts to Community Ambassador Program [SFist]
Image: Patrick Perkins via Unsplash
