San Francisco Mayor London Breed has closed an approximately $246 million budget deficit in the current fiscal year caused by COVID-19 impacts, largely by using about 50 percent of the general fund reserve and reducing spending on capital projects.
There were cuts to street repaving, installation of curb ramps, behavioral health treatment beds for transitional age youth, childcare subsidies and the elimination of two of the four firefighting hose tender trucks the Fire Department intended to purchase.
Breed’s budget “rebalancing plan,” presented Wednesday to the Board of Supervisors Budget and Appropriations Committee, addresses the deficit in the current fiscal year that ends June 30. The City still faces a $1.5 billion deficit over the next two fiscal years. The mayor will introduce a city budget to close that deficit by Aug. 1.
The current year’s deficit was closed using “mostly” one-time savings and “leaves many hard choices to solve that remaining $1.5 billion,” said Ashley Groffenberger, deputy budget director in the Mayor’s Budget Office.
She said that since the COVID-19 emergency occurred later in the fiscal year, many projects and services were well-underway and that “really left us with lots of small, limited choices.”
Breed closed the shortfall using $77.6 million from the general fund reserve, the single largest source of funds to close the deficit, according to the budget analyst’s report, along with reductions to capital projects totaling $52.5 million and reductions to city department budgets totaling $38.6 million.
The Recreation and Parks Department, for example, was facing a shortfall of $9.1 million after losing $11.1 million in revenue from event cancellations as a result of the COIVD-19 shelter-in-place order.
The department is closing its shortfall mostly through “$4.1 million in overtime and salary savings due to the City’s hiring freeze and $4.4 million in reductions to capital projects.”
Breed also repurposed some $58.8 million in so-called ERAF funding that she and the board had previously agreed how to spend to close the shortfall. For example, there was $40 million in ERAF funding that was set aside for affordable housing projects, including 4840 Mission St. and Balboa Park Station Upper Yard. Instead, this money will now come from the $600 million voter-approved 2019 Affordable Housing Bond. The change in funding sources will not impact the timeline of the projects, city officials said.
Supervisor Rafael Mandelman lamented the decrease in affordable housing bond money and suggested The City ought to look into making deeper cuts elsewhere instead of shrinking the pot of money for things like affordable housing.
“There’s $40 million of affordable housing investments that will not happen because we are doing that, particularly as we go into a moment when there may be opportunities to acquire sites,” Mandelman said.
Specific cuts include $6.6 million for Public Works’ street resurfacing, although city officials said no specific projects are being impacted by the reduction. There is also a cut of $2.8 million to install curb ramps.
The Fire Department’s $4 million for hose tender trucks was cut in half so they can only purchase two, not four, to use as mobile water supply during emergencies in places like the West Side where the emergency firefighting water system does not reach.
Breed also cut $2 million for Transitional Age Youth behavioral health treatment beds. “No provider or site has been identified” since the funds were allocated for this purpose, the report said.
She also cut $1.5 million from her own initiative, the Opportunities for All program, that helps youth obtain employment. “Mayor’s Office staff report that the mayor has committed to make up for the reduction in general fund support through private fundraising,” the report said.
The report noted that “the mayor’s rebalancing plan includes a total of $2.5 million in reductions to early childcare teacher stipends and/or childcare subsidies supported by prior ERAF allocations.”
The next step in the budget process is that city departments must submit budget proposals to the mayor by June 12 with a 10 percent budget cut in the next fiscal year, growing to 15 percent in the subsequent year.