Tussling over S.F.’s surprise windfall
Breed’s vision at odds with some supervisors’ over use of $181 million
The political wrangling around the $181 million the city unexpectedly received last week began Tuesday, as Mayor London Breed and a number of supervisors offered differing visions on how they want to spend the extra money.
The proposals, which were introduced Tuesday at the Board of Supervisors meeting, concern the unexpected $415 million windfall the city received from excess revenue in a coun- ty education fund. While the City Charter mandates that more than half the money go toward budget reserves and certain city agencies, such as the Municipal Transportation Agency, the mayor and board have free rein over how to spend $181 million.
Breed and the six supervisors who sponsored the competing proposal — Aaron Peskin, Rafael Mandelman, Sandra Lee Fewer, Hillary Ronen, Norman Yee and Jane Kim — agree that most of the money should be spent on homelessness and housing initiatives. They differ, however, on exactly how much.
And because the board won’t be able to take up the allocation until next year, when its composition will shift to a progressive majority, deciding how the funds are spent is likely to amount to one of the mayor’s first political tests of how she can negotiate with a left-leaning board.
The mayor wants to use the money largely to meet the goals of Proposition C, a November ballot measure she opposed that would raise $300 million in taxes from the city’s largest businesses to fund homeless services. The measure passed with 61 percent approval, but is facing possible legal challenges that could hold up the money for months or even years.
Breed is proposing to split the extra money into two chunks: $90.5 million for the Mayor’s Office of Housing and Community Development and $90.5 million for the Departments of Public Health and the Department of Homelessness and Supportive Housing together. The money would go toward specific initiatives, such as jump-starting her ambitious goal of adding 1,000 shelter beds by the end of 2020 and conducting a performance review of the city’s existing homelessness programming.
Meanwhile, the supervisors’ proposal — spearheaded by Peskin — seeks to divvy up the money in a more diverse way: $121 million for the Mayor’s Office of Housing and Community Development and the Department of Public Health; $10 million to help meet some of the goals of June’s Universal Childcare for All ballot initiative, which is wrapped up in a lawsuit; and $50 million to go toward reducing San Francisco’s reliance on Pacific Gas and Electric Co.
The board’s proposed $50 million allocation to purchase electric utility equipment from PG&E would give the city more independence from the utility company, potentially easing the friction of recent years about how power gets delivered to some municipal facilities.
City officials have complained that PG&E’s insistence on what critics call arbitrary technical requirements has resulted in substantial delays and cost overruns on numerous city projects — including affordable housing developments, recreation spaces and public-safety facilities.
Years of tensions between the city and PG&E peaked in March when Barbara Hale, the San Francisco Public Utilities Commission’s general manager in charge of power, accused PG&E of requiring city projects to be built to handle power loads far beyond what was actually needed. At the time, Hale said that at least 16 projects were facing delays because of the utility’s mandates, some by over a year.
PG&E maintains that it’s unfair for San Francisco to take advantage of the utility’s infrastructure without having to own or maintain any equipment, and it has cited the arcane Federal Power Act to back up its claims. The utility’s position is that the city must meet its requirements and install equipment of its own if it wants to transmit electricity over PG&E’s lines at wholesale prices.
Since 2014, PG&E and the city have waited for the Federal Energy Regulatory Commission to sort out the matter, but a judgment could take years.
The sudden influx of cash came from the Educational Revenue Augmentation Fund, or ERAF, a state program that shifts a portion of local property taxes to public school systems in each county. When county auditors determine that the fund has enough money to meet the minimum state funding requirements for its public schools and community colleges, the remaining funds are returned to the local governments — with few restrictions on how they’re spent.
This is the first time San Francisco is receiving excess ERAF money. The exact figure, $414.7 million, includes excess ERAF for both the previous and current fiscal year. City Controller Ben Rosenfield said his office is working with the State Controller’s Office to determine if the city is owed excess ERAF money from previous years.
Tuesday’s proposals will set off a 30-day legislative waiting period. Details will be debated in 2019, when three new supervisors — Matt Haney in District Six, Gordon Mar in District Four and Shamann Walton in District 10 — join the board.
The outcome of the November election put into question how many allies Breed will have on the 11-member board when it comes to fulfilling key parts of her agenda — and it remains to be seen how she will negotiate the use of the excess funds with a progressive-majority board.
“The mayor wants to ensure funding goes to affordable housing and homelessness, so we can help people get off the streets,” said Jeff Cretan, the mayor’s spokesman. “She looks forward to discussing her priorities with the board, as well as their priorities in the coming weeks.”
Ronen said Tuesday is only the beginning of the conversation on how to spend the money.
“What’s going to happen here is that there are going to be two different versions of how to spend that money, and we’ll have a very public debate and make different cases, and then meld them together,” she said.