S.F. budget deficit rises with virus cost

San Francisco’s response to the COVID19 pandemic is on track to cost the city about $375 million by the time the fiscal year ends on June 30, according to new economic data released Wednesday by city budget and finance officials.

In the 78 days since Mayor London Breed placed San Francisco in a state of emergency over the novel coronavirus, that equates to just over $4.8 million a day.

The figures, issued as part of a report on the city’s fiveyear financial plan, provide the first public glimpse into the costs of the city’s efforts to purchase personal protective equipment, house vulnerable residents and first responders, and prop up socialsupport programs for people impacted by the public health emergency and its ravaging effect on the economy.

“With over 100,000 San Franciscans applying for unemployment and an uncertain timeline for recovery, we are in for a long, hard road. This is going to require a lot of tough choices and creative solutions, but I’m confident that we can do the work it takes to get San Francisco through this,” Breed said in a statement.

Despite the new data, much remains unclear about the city’s financial future, which depends in large part on how long the impacts of the pandemic endure. So far, about 75% of what the city has spent in its response to the pandemic will be reimbursed by the Federal Emergency Management Agency, city officials expect. Most of the rest will be covered by federal stimulus money and philanthropic efforts.

But how long the city will be able to rely on FEMA reimbursements is still unknown, and the $154 million San Francisco received from the federal Cares Act has already been allocated. There is also no clear sense of how long the city will need to continue COVID19 testing or perform contact tracing investigations.

The report refines projections released by the city in March. But unlike previous estimates, Wednesday’s report dispenses with the prospect of a rapid recovery.

“These projections assume a slower economic recovery begins later in 2020 and continues into subsequent fiscal years,” the report said.

“Deeper losses would occur if continued community exposure to COVID19 requires a slower resumption of economic activity” or if outbreaks require the city to reimpose restrictions that had been lifted.

In the coming months, Mayor London Breed and the Board of Supervisors will have to close a deficit of about $1.7 billion through the 202122 fiscal year. San Francisco operates on a twoyear budgetplanning cycle.

The city has instituted a broad hiring freeze and paused nonessential capital projects like building maintenance, nonemergency tree pruning and street repaving to confront the growing sea of red ink, and deeper, more painful cuts are likely on the way.

Since the city’s first shelter-in-place mandate didn’t take effect until midMarch, Wednesday’s report estimates a $246.2 million shortfall in the fiscal year that ends June 30. Things only get worse from there.

City officials are staring down a nearly $754 million deficit in the 202021 fiscal year and a $735.4 million gap in the next one.

The projections get hazier in later years, but the city budget and finance officials estimate annual shortfalls of $1 billion and $1.1 billion in the 202223 and 202324 fiscal years, respectively.

“The city’s financial outlook has taken a sharp turn for the worse, and while our financial preparation in recent years will soften the blow, extremely hard choices lie ahead,” City Controller Ben Rosenfield said in a statement.