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Where did all our money go?

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Is San Francisco spending like a drunken sailor? Although The City’s budget has gone up over the past 10 years, it is also serving more residents and providing more services. (Courtesy photo)

When he was running for supervisor last year, my friend and fellow Examiner columnist Joel Engardio would ask an interesting question. “The City’s budget has doubled in the last decade. Are you getting twice as much service?”

San Francisco’s fiscal year 2006 budget was $5.75 billion. Ten years later the 2016 budget is $9.59 billion, a $3.8 billion, or 67 percent, increase. (We won’t fault Joel for rounding up to “double” for brevity.)

Where the hell did all our money go? Is City Hall just a giant drunken sailor under a gold-leafed dome? Surprisingly, almost reluctantly, I would say no.

First, we need to compare apples to apples. Adjusting for inflation, the $5.75 billion budget in 2006 was actually $7.32 billion in today’s dollars. And in those ten years, The City’s population grew by about 12.5 percent. Broadly speaking, providing the same 2006 level of service to 12.5 percent more people would have made that year’s budget $8.23 billion.

So adjusting for inflation and population, The City’s budget has actually grown $1.35 billion, or 16 percent, in ten years. That’s still nothing to sneeze at. How do we account for it?

About one quarter of the growth comes from enterprise departments, which charge for the services they provide. When their budgets increase, it doesn’t necessarily mean local taxpayers are saddled with more burden. It often means the departments just have more customers. San Francisco International Airport, for example, had 33.6 million passengers in 2006. By 2016 it had 51.4 million. Those additional 17.9 million passengers buy food and Alcatraz trinkets in the terminal, rent cars and pay airline fees — all of which inure to SFO’s bottom line.

Thus the airport’s budget grew by 14 percent as its passengers increased by 53 percent. The San Francisco Public Utilities Commission, which sells water all over the region and is rebuilding our fresh and sewer water systems, grew by 10 percent. And the San Francisco Municipal Transportation Agency, which has hired hundreds of new drivers and expanded Muni service by 10 percent citywide, grew over 20 percent. All told, enterprise departments account for $310 million of our adjusted budget growth.

That leaves a little over $1 billion of general fund growth.

It’s worth pointing out what is not driving this. It’s not pension costs (though those would be much higher but for policy changes made several years ago). And it’s not a binge of new city employees per se. There were 27,162 positions in 2006 and 30,626 in 2016, a 12.8 percent increase that mirrors overall population growth.

No, the biggest driver of general fund growth is healthcare. The Affordable Care Act has expanded coverage to more people and funneled more federal and state dollars to local departments, again meaning some increases are not new burdens on local taxpayers. Meanwhile the City has rebuilt and staffed General Hospital and expanded our social services. Thus, health and human services departments account for $527 million of the budget growth.

About $500 million remains.

Public safety departments account for $66 million of it, driven primarily by increased police hiring. The Department of Public Works represents another $88 million, as they’ve improved our streets from a Pavement Condition Index score of 64 in 2006 to 69 last year — with the curve that’s much better than a D-plus. The Office of Economic and Workforce Development has increased its neighborhood programs and workforce grants adding $48 million.

We’re down to $300 million.

The Department of Children, Youth, and Their Families oversees a generous children’s fund and adds $94 million. The Mayor’s Office of Housing is spending over $100 million more on affordable housing. And the City Administrator has inherited roles from other departments and expanded services like 311, adding $86 million. Then we have smaller increases and decreases across the remaining departments.

Yes, San Francisco’s budget has grown. But not nearly as much as it appears, and much of it occurred because more people are paying for city services like SFO. We’re ultimately talking about one billion in growth, not four or five.

San Francisco cannot run a deficit; we spend what we take in. And in the last decade, as property values have skyrocketed and unemployment plummeted, The City has taken in a lot. Collectively, we’ve chosen to spend that money on better health care, more police officers, improved streets, care for our kids, affordable housing and overall increased services.

Personally I think San Francisco spends too much, wallows in way too much process. But the portrait of a city doubling its budget with drunken profligacy is just not accurate. These are reasoned policy choices The City has made. And when times turn lean, we will face tough choices in the other direction.

Conor Johnston is the Chief of Staff to Board of Supervisors President London Breed and co-founder of the East of Twin Peaks Neighborhood Association. The views here are his own.

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