Mayor London Breed quietly ordered sweeping midyear budget cuts on Friday, portending a challenging year ahead.
Facing a deficit now estimated to quickly exceed $1 billion in the coming years, Breed ordered her department heads to hold back $75 million of planned spending this year while leaving intact “basic City services.”
The cuts amount to “just a small down payment,” Breed wrote in a Friday letter to her department heads.
“Much larger cuts will be needed in the months ahead, and that will require more planning and longer discussions we’ll have with you, your staff, and other City stakeholders,” Breed wrote.
The cost-cutting was not unexpected, as Breed had requested department heads propose 3% midyear budget cuts in October. They amount to a small percentage of The City’s $14.6 billion overall budget.
A plurality of the $75 million in savings comes from new revenue — such as state grants — that will cover expenses previously paid for by The City’s general fund. Nearly one-third will be accounted for by leaving unfilled numerous city jobs that are currently vacant.
The City will cancel about $22.7 million in planned spending on a wide range of programs, including $2 million for the creation of an Office of Reparations and $1 million for the planned expansion of a navigation center serving homeless youths in lower Nob Hill.
The chopping block includes several “addbacks” secured in this year’s budget by the Board of Supervisors.
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“The City will still maintain its focus on core city services, including public safety and cleanliness, homelessness, behavioral health, and supporting our economy and neighborhoods,” Breed wrote. “This includes efforts to stabilize and support police staffing, continue the expansion of shelter beds and treatment services, enhance street cleaning, and support our local workforce.”
Mayor London Breed at SoMa House Hotel at 121 7th Street in San Francisco during its grand opening on Thursday, Nov. 2, 2023.
Craig Lee/The Examiner
Earlier this year, Breed received criticism from members of the Board of Supervisors for failing to adequately plan — and delaying difficult decisions — for what was sure to be a troubling several years for The City’s budget.
Board of Supervisors President Aaron Peskin told The Examiner in June that the budget was “status quo” and lamented that “we’re stalling harder decisions that will be compounded for a future date.”
The City’s deficit is expected to exceed $1 billion by 2027, prompting Breed’s administration to take action now.
Several factors are contributing to The City’s financial woes, chief among them its economic decline during and after the COVID-19 pandemic.
The cuts enacted by Breed last week amount to $75 million in the first year and $35 million in each year after, amounting to more than $200 million, according to her office.
“I am committed to tackling our City’s many challenges and meeting the needs of our residents, and that will require making difficult tradeoffs,” Breed wrote.
The City is working on an update to its financial forecast, which will inform the instructions Breed issues to her department heads as they plan for next year’s budget.
