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City Hall erupts in drama as budget negotiations hit impasse

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The Board of Supervisors must approve the mayor’s budget proposal by July 31. (Rachael Garner/2016 Special to S.F. Examiner)

Negotiations over San Francisco’s budget proposal fell apart Thursday night, despite an expected deal.

Among the main reasons cited was that Mayor Ed Lee refused to meet with Supervisor Aaron Peskin after being invited by Supervisor Malia Cohen to join talks with the mayor to try and wrap up budget negotiations, according to those involved in the process.

Peskin was kept waiting while the mayor met with Cohen, who chairs the Board of Supervisors Budget and Finance Committee, and would not meet with Peskin at all.

Peskin then simply left City Hall. Some attributed his departure to being offended — Peskin has had contentious relationships with past Mayors Willie Brown and Gavin Newsom but they’d still managed to hammer out policies together — and the budget negotiations, which many described as being rocky and tense since the morning, continued to unravel.

When reached for comment later at his home by the San Francisco Examiner, Peskin said, “When the mayor is not interested in negotiating, I’m not interested in sitting around wasting my time.”

SEE RELATED: Board committee rejects deeper cuts into Mayor Lee’s budget proposal

Peskin went on to blast the mayor for refusing to come up with more funding for The City’s most vulnerable residents, such as by trimming the salary budgets of “bloated” city departments or reducing the recently increased command staff at the Police Department, which has made it more top heavy than comparable departments.

Mayoral spokesperson Deirdre Hussey would not address the Peskin incident specifically, but said the mayor “negotiates with the chair of the budget committee.”

However, some at City Hall recalled in previous years when moderate Supervisor Mark Farrell was budget chair the mayor met with other progressive supervisors to negotiate.

Lee subsequently left town to attend a U.S. Conference of Mayors in Miami.

Supervisor Norman Yee, who sits on the budget committee, also left town for a trip to Chicago related to the Annie E. Casey Foundation, a nonprofit that helps children. He had assumed a budget deal would have been reached before his planned trip.

Peskin, a progressive standard bearer, never intended to be on the budget committee in the first place. In fact, he was only put on the committee by board President London Breed in the past five days to fill in for Supervisor Jane Kim, another progressive, who left on a junket to London to study congestion pricing. Kim is expected back late Friday.

Another supervisor out of town, but who does not serve on the budget committee, is Farrell, who is visiting Ireland for a class reunion.

As part of the budget committee process, the legislative aides of the five progressive and six moderate supervisors spent long hours Wednesday negotiating a list of what are known as “add-backs,” attempting to reach a compromise. Those talks extended to 2:30 a.m. Thursday before breaking up and resuming later that morning.

Every year, the mayor submits to the Board of Supervisors by June 1 a city budget proposal. The board’s Budget and Finance Committee then reviews the budget, makes cuts and uses the money from those cuts to fund other priorities in what is traditionally called the “add-back” process. During the add-back process, nonprofits and community advocates more politically aligned with the progressives call for increased funding in social services that assist residents most in need.

The committee, this year chaired by the moderate Cohen for the first time, had made cuts totaling $29 million over the two-years of the mayor’s budget proposal heading into Wednesday. The City operates on a two-year budget, which is $10.1 billion in each of those years. The requests for funding far exceeded that amount. Those involved in the process said the add-back pot had increased by about $7 million more Thursday.

The process, which involves negotiations with the mayor to arrive at a budget deal, has been mostly drama-free in recent years, but during the Newsom era, when the tough economic times required deep cuts, tensions often flared.

Supervisor Hillary Ronen, a rookie progressive supervisor but former legislative aide to her predecessor David Campos, called the budget talk breakdown “unprecedented.”

“The way the budget is now, I can’t support it,” Ronen said. “It doesn’t adequately address the most important issues in San Francisco.”

Those “issues” were highlighted during a five-hour committee hearing Monday when the public was invited to comment on the mayor’s budget proposal. There were calls for increased spending on more child care subsidies for low-income families, meals for seniors, homeless shelters and rental subsidies to prevent evictions.

The committee is scheduled to meet again at noon Friday. But some involved in the budget process say a deal could now be days if not weeks away.

Still, Peskin offered more hope than despair. “Tomorrow is a new day,” he said. “We’ll all start talking again.”

He said that “none of this is personal.”

He continued, “It is about public policy. There is no moderate or progressive pothole. There is no moderate or progressive homeless shelter.”

Cohen didn’t answer calls but said in a text message that “we’re committed to an on-time balanced budget and look forward to getting back to work at noon.”

When asked why the mayor wouldn’t meet with Peskin, she said, “Good question. It’s unclear.”

The board must approve the mayor’s budget proposal by July 31.

At 10:30 p.m. Thursday, Cohen, who had recessed the five-member budget committee earlier that day to allow for further negotiations, resumed the meeting. By then it was only attended by the moderate board members, Cohen along with supervisors Jeff Sheehy and Katy Tang who serve on the committee — Peskin having left City Hall and Yee was on his way to Chicago — who were joined by Breed and Supervisor Ahsha Safai.

Breed did not respond to requests for comment.

Cohen announced at that 10:30 p.m. meeting that the committee would again be recessed until Friday at noon but also seemingly criticized the process by which community advocates and nonprofit leaders ask for more funding.

“Over the last two days it’s become increasingly evident to me that this process is flawed,” Cohen said. “It doesn’t allow us to be thoughtful or thorough in understanding the outcomes or successes of the diverse and vital social programs that we want to support and that we want to fund.”

She called for transparency in the add-back process. “There has been too much reliance on a select group of politically savvy and coordinated insiders. We need a cultural change to how we are doing business here. It shouldn’t be conducted behind closed doors.”

Those involved in the process said Cohen suggested putting add-back money in a reserve fund and deciding during public hearings later which services should receive the money.

Peskin said that while the budget process could always use improving he couldn’t recall Cohen — who is running for election to serve on the state Board of Equalization — ever complaining about it before during the six previous years she went through it.

Jennifer Friedenbach, executive director of the Coalition on Homelessness, who is among those asking the board for increased funds for social services, said Cohen sounded like a Republican.

“They call poor people ‘special interests,’” she said.

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