San Francisco has set aside $1.2 billion to be allocated toward 19 different services, including the SFMTA, police staffing, public libraries, parks and children’s services. (S.F. Examiner)

SF comes to grips with $1.2B in annual spending mandates

San Francisco’s voters have over the years created a slew of spending mandates that lock up a sizeable portion of the budget for specific services.

But the practice, which has significantly increased in recent years, is coming under greater scrutiny.

Last year alone, three new set-asides — the most in any single year — were approved by voters after being placed on the ballot by the Board of Supervisors, bringing the total to 19. Only half of the 19 mandates have expiration dates, which is when the board and voters will have to decide whether to renew them and make changes.

SEE RELATED: Setting aside the tough decisions

By comparison, Los Angeles has two set-asides, San Diego has one and San Jose has none.

The mandated spending is referred to as either a set-aside or baseline spending.

“This level of voter-mandated spending is really quite unique to San Francisco,” said Michelle Allersma, director of budget and analysis for the City Controller’s Office. “For policymakers, it just means that you have fewer choices that you are able to make to increase services or to shift funding.”

A City Controller study, requested by supervisors Katy Tang and Aaron Peskin, examined The City’s set-asides. Tang said residents will be “quite shocked” to see the findings of the report, which was discussed Thursday during the board’s Budget and Finance Committee.

Peskin said “the numbers are quite startling” and that spending mandates are “the easy way out” for elected officials, in that they don’t have to do the work to decide what gets funded or seek to raise additional tax revenue.

Tang plans to propose changes to the way The City deals with set-asides and possibly bring to voters a charter amendment to change them, such as adding expiration dates or suspension clauses if there is an economic downturn.

“I have plans to begin conversations with colleagues and community members on whether we can at minimum establish policies that must be in place for any set-asides that are put on the ballot. For example, all must contain an expiration date and suspension trigger (for bad economic times),” Tang said in an email to the San Francisco Examiner. “This would be the bare minimum that I would work on, as I would like other policies to be in place.”

In fiscal year 1994-95, the spending mandates totalled $200 million. Today, the number has grown to $1.2 billion.

By 2021, the amount will reach $1.6 billion, or 30 percent of the General Fund budget. Oakland, by contrast, mandates 3 percent of its discretionary general funds.

Put another way, “By FY21-22, only 70 percent of General Fund revenues will be available for any purpose,” the report said.

The City currently has a $10.1 billion budget, of which about half — $5.1 billion — comprises the General Fund.

Of all the spending mandates, the largest amount of the spending goes to the San Francisco Municipal Transportation Agency, followed by children’s services, police and the library.

Last year, voters approved three new set-asides for parks, tree maintenance and senior services.

The $1.6 billion mandated in 2021 includes $480 million for the SFMTA, $271 million for police — to meet the requirement of 1,971 officers — $151 million to the library, $148 million for the Recreation and Park Department open space fund and maintenance spending, and $105 million for children’s services.

Peskin, who is working with Tang on the issue, said he wants to enact policies related to possible future set asides and possibly go to the ballot “to fix certain things.”

“All of these set-asides are for remarkably worthy causes, but it really constrains The City, the Board of Supervisors [and] the mayor from being able to make tough decisions on an annual basis,” Peskin said.

“In many ways, it’s the easy way out. It doesn’t require us to look for new sources of revenue. It really constrains our ability to govern and allocate money in the best and most mature way that’s most responsive to the needs of the day.”

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