San Francisco's growing budget deficits threaten basic services

The City is looking at more years of massive budget deficits that threaten core services such as policing and street repair, according to a report released Thursday by the City Controller’s Office.

While the controller lowered The City’s latest deficit projection for the upcoming fiscal year to $306 million from $380 million, the report painted a grim financial picture for the following years.

There is a $480 million deficit projected for fiscal year 2012-13, and a $642 million deficit projected for fiscal year 2013-14 — which amounts to nearly $800 for every San Franciscan.

The budget gloom and doom is fueled by increasing labor costs even though The City is operating with 2,000 fewer workers than 10 years ago.

“We have watched this train wreck happening in slow motion,” said Gabriel Metcalf, director of the public-policy think tank San Francisco Planning Urban Research Association. “The pension and benefit costs have gotten out of control. If we don’t take radical action, we are going to be slashing public services.”

The budget projections overshadowed encouraging news that the local economy is improving and that The City expects to see modest job growth in coming years. City leaders are in talks with labor leaders on a November ballot measure to rein in pension costs in the coming years. There is a May 24 deadline to submit a charter amendment.

More than one third of next year’s deficit is from increasing labor costs. The City’s pension contribution is projected to increase from $225.8 million next fiscal year to $323.9 million by fiscal year 2012-2013.

Board of Supervisors President David Chiu said in a statement that the city’s budget “outlook is bleak and getting bleaker” and the shortfalls are a threat to basic services.

Mayor Ed Lee said even with a “recovering economy” The City must reduce labor costs. “In order to protect the long term fiscal health of city government, we must continue our work to address the unsustainable growth in public employee health and pension costs in order to protect vital public services in the years to come.”

Lee must submit a balanced city budget by June 1 to the Board of Supervisors.

By the numbers

$306M Fiscal year 2011-12 deficit

$480M Fiscal year 2012-13 deficit

$642M Fiscal year 2013-14 deficit

26,108 Current number of city employees

28,060 Number of city employees 10 years ago

Source: City Controller’s Office

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