The local economy is recovering more quickly than city officials had expected, resulting in $122.3 million in extra tax revenue, according to a budget report released Monday afternoon.
The City had assumed a moderate recovery in tax revenues throughout the fiscal year, but revenues from hotel, payroll, sales and property sales and transfers are outpacing those projections, according to the city controller’s report.
Business owners seem to be enjoying the direction San Francisco’s economy is heading, although they are not yet singing financial hallelujahs.
“You have good days; you have bad days,” said David Heller, president of the Geary Merchants Association and owner of Beauty Network. “I’m just a little bit above water. … Things are better than last year. But it’s still tough.”
Stephen Cornell, owner of Brownie’s Hardware on Polk Street, said he frequently asks nearby business owners how they’re doing and he hears, “It’s OK.” He said he isn’t hearing, “Oh, it’s great.”
Cornell’s business has not broken any records, but it has been improving for the past two years. Yet he doesn’t see anyone rushing to move into the empty storefronts he has noticed along Polk Street.
Robert Roddick, president of the Noe Valley Merchants and Professionals Association, said his merchants are doing well, but he credits their own efforts.
“We think we’re doing well here, but not because of the economy, but because what we promote,” Roddick said. The association’s 100 merchant members contribute a combined $36,000 a year to put on promotions, he said.
The controller’s report credited a variety of factors for the increased tax revenue. Local sales tax, for example, will bring in $7.5 million more than expected due largely to higher gas and jet fuel prices, “but also to increased taxable sales at restaurants and in general retail and construction.”
Yet the promising revenue picture doesn’t mean city departments face no budget cuts. Departments must submit budget proposals by the end of this month assuming a 5 percent cut in each of the next two fiscal years, and a 2.5 percent contingency during the course of both years.
Even with the stronger revenues, The City faces a $229 million deficit for the fiscal year beginning July 1, and a $364 million deficit in the year after. The City’s expenses continue to rise faster than its revenues, largely due to employee costs.
Mayor Ed Lee took credit for the improved fiscal outlook.
“San Francisco’s economy is moving in the right direction,” Lee said. “My economic development and job creation policies are setting San Francisco on a path toward economic recovery.”