Mayor: City's budget situation 'legitimately a crisis'
By: Brent Begin
Examiner Staff Writer
December 9, 2008
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Mayor Gavin Newsom says The City's budget deficit "requires people to work together and do things very differently." (Examiner file photo)
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SAN FRANCISCO — The City is facing a fiscal “crisis,” with one of the largest deficits in San Francisco history expected in the next year, Mayor Gavin Newsom said Monday, adding that hundreds of layoffs could be announced as soon as Tuesday.
City officials forecast a $575.6 million budget shortfall for the next fiscal year, which begins July 1. Newsom said he will also announce department cuts today, which will only be a preview of fiscal belt-tightening in the months ahead.
“It is one of the most significant budget shortfalls The City has ever faced — arguably the most significant,” Newsom told The Examiner. “It can only be referred to as, not as a problem, it is legitimately a crisis.”
The city and county of San Francisco has an annual budget of $6.5 billion, which includes operation of the airport, the port, Muni, jails and health services. About $3 billion is considered the general fund, from which police, fire, road improvements, street cleaning and parks are funded.
The deficit is by far the largest since Newsom took office, and it could continue to grow as the nation faces a recession. The slowdown has taken its toll on San Francisco in less revenue from sales, property transfer and payroll taxes.
The mayor already closed $338 million in debt for the current fiscal year and will have to cut an additional $90 million to $125 million to end the year in the black.
In June, Newsom pledged to lay off 450 city workers, but instead saved hundreds of jobs by eliminating vacant positions. Nearly all of the 27,000 workers employed by The City are in line for a pay raise in the new year, including police and fire employees, who negotiated a 7 percent pay hike.
Newsom said those raises, already factored into budget planning, are necessary to keep the best employees working in San Francisco.
City departments will spend the next several months revamping their budget plans to adjust spending. The mayor must send his proposed budget for next fiscal year to the Board of Supervisors by June 1. It then makes adjustments to the plan.
Newsom said there will be “a dramatic shift in the way things have been done” and “it does not require people to give up, or to throw up their hands. It requires people to work together and do things very differently.”
The projected deficit of almost $576 million for next year includes $72 million in cuts from the state. That number is likely to grow, Newsom said.
The mayor’s remarks come as the Controller’s Office released its latest economic barometer report, covering the month of October.
Unemployment in The City hit the 6 percent mark for the first time since June 2004, according to the report, which stated that “most indicators continue to show accelerating weakness in San Francisco’s economy.”
The median home sales price in The City continued to be more than 10 percent below last year’s median, and October also a drop in rental prices.
Tourism continues to be the one bright spot, although a decrease in International airline traffic could mean less foreign spending.
Board of Supervisors President Aaron Peskin is also expected to join the budget process today, identifying ideas separate from the mayor’s office to balance the budget.
