San Francisco projects losses of up to $288 million in the current fiscal year alone due to the toll the coronavirus have taken on the local economy, according to a new report.
“Financial losses associated with the emergency have been stark and immediate, and the level of uncertainty of both city revenues and expenditures is historically high,” said a joint memo from the city controller, budget analyst and mayor’s budget office. “Our offices provide this March outlook as a planning tool for the mayor and Board of Supervisors to begin navigating these challenges.”
The report projects a loss in the current fiscal year, which ends June 30, of an estimated $167 million to $287 million.
The impact in the upcoming fiscal years is projected at “between $528 million and $779 million for FY 2020-21 and $444 million and $612 million for FY 2021-22.”
The mayor’s office noted that “combined with the prior deficit projections, this results in revised shortfall estimates of $1.1 to $1.7 billion.”
Among the biggests hits to city coffers are the loss of business taxes, hotel taxes and the real estate transfer tax, which is a tax on the sale of properties.
“The coronavirus pandemic is an immediate threat to our public health and we’re doing everything we can to slow its spread and save lives, but we know that it is also having a major impact on our economy and our city’s revenue,” Mayor London Breed said in a statement. “The economic impact that is already hurting our residents and businesses is also going to require difficult decisions by the city moving forward.”
Breed wrote a letter to department heads Tuesday morning directing them to begin to reduce spending.
“In order to offset these significant financial losses, I am instructing departments to help identify cost reductions and curb spending immediately,” Breed wrote.
That means that some planned projects may not move forward.
Breed told department heads in the letter to look at “pausing new programs funded in prior budgets that have not started.”
Since the Great Recession of 2008, The City has adopted new policies to help withstand another economic slowdown, including building up reserve funding.
“This puts us in a better position to address these economic impacts, but given the sheer size of the financial losses we are facing, we will have to implement meaningful solutions and make difficult choices,” Breed wrote.
Breed also announced with members of the Board of Supervisors Tuesday that she will re-issue new budget instructions to city departments to propose ways to close the shortfall and she will issue a balanced city budget proposal for the Board of Supervisors to approve by Aug. 1, instead of by June 1, as is the usual deadline.
Supervisor Sandra Fewer, who chairs the board’s budget and finance committee, said in a statement that “we simply need more time for an intentional and transparent city budget process.”
“We will undoubtedly have difficult budget decisions ahead of us in the coming weeks and months,” Fewer said.