City offices told to slash budgets by at least 10%
The staggering economic fallout set in motion by the coronavirus pandemic will force San Francisco city departments to slash their budgets by 10% in the upcoming fiscal year to help close an anticipated $1.7 billion deficit.
Mayor London Breed’s deputy budget director, Ashley Groffenberger, delivered the sobering instructions to the Board of Supervisors’ Budget and Appropriations Committee on Wednesday. Departments must also identify an additional 5% of their budgets that can be cut in the 202021 fiscal year, should economic conditions continue to worsen.
The next several months would require “really tough and painful choices,” Groffenberger said.
Cuts will be even deeper in the following fiscal year, with mandatory 15% budget reductions in 202122.
Any hope of closing the deficit and balancing the budget “will require a mix of tough decisions and reevaluating the way the city does business,” Groffenberger said. While the
city has already frozen hiring of nonessential city workers and people unrelated to pandemic response, additional tightening must be done without losing sight of vulnerable communities, like the homeless and mentally ill “facing even steeper obstacles,” she said.
The cuts will affect all departments tied to the city’s roughly $6 billion general fund and don’t apply to “enterprise departments” like the Municipal Transportation Agency, the airport and the Public Utilities Commission, which generate their own revenue through service charges.
The mandated reduction plans are due back to the mayor’s budget office by June 12. Unlike in previous recessions, the budget cuts are coming at the end of the city’s ordinary budget cycle. That means severely compressing the time in which departments, the mayor and the Board of Supervisors have to make the hardest budget cuts the city has faced in a decade, City Controller Ben Rosenfield said.
City officials have given themselves two extra months to try to close the deficit: Breed will turn her proposed, balanced budget over to the board on Aug. 1. It must be finalized and signed by the mayor by Oct. 1.
“These are significant reductions we are facing, and every dollar we can keep towards delivering basic city services counts,” said Rachel Gordon, a spokeswoman for Public Works. “As the budget process unfolds, we are going to keep our focus on doing everything we can to maintain the services San Franciscans want and deserve: clean and safe streets.”
On top of the hiring freeze, Breed’s budget office asked departments to consider reducing or eliminating nonessential or underperforming contracts, reducing personnel costs by leaving open posts vacant and seeking out new revenue sources, such as grants from the state or federal governments or the private sector.
Still, it will likely be difficult for some departments to meet the 10% and 15% cuts without layoffs and service reductions. Supervisor Rafael Mandelman said he was particularly concerned about the future of the city’s behavioral health system and the prospect that desperately needed treatment beds could be lost or postponed.
“The last time we went through this exercise, I was just a protester outside S.F. General as the city was eliminating hospital beds,” Mandelman said, referencing the decisions that led to the elimination of beds following the 2008 economic crash and the recession that followed. “We really need to understand how it’s going to be different this time.”
Adding to the tension are several recently introduced ballot measures that could further strain the city’s finances at such a precarious moment.
One charter amendment introduced Tuesday by Supervisor Gordon Mar would require a $20 million annual setaside for City College of San Francisco, a figure that would grow $2 million each fiscal year for the next five fiscal years. Mar and the measure’s supporters argue the proposal will be essential for retraining the roughly 100,000 San Franciscans who are now out of work.