San Francisco approved a $13.6 billion city budget Tuesday after closing a more than $1.5 billion deficit caused by an economic downturn due to the COVID-19 pandemic.
In a 10-1 vote, the Board of Supervisors approved the budget proposal introduced on July 31 by Mayor London Breed after the board’s Budget and Appropriations Committee spent August making changes.
The vote comes after The City extended the deadline for approving the budget as it strove to get a handle on the impacts of the sudden economic crisis. It avoids layoffs, dips into funding reserves and relies on the passage of this November’s ballot measure to amend the gross receipts tax to help generate revenue.
Supervisor Sandra Fewer, who chaired the board’s budget committee, said she was “extraordinarily proud of this budget,” highlighting changes the board made to “serve our most vulnerable residents in the midst of a pandemic and serious economic recession.”
“We invested deeply in the restoration of services, food security, rental assistance, COVID response, and racial equity for Black communities and communities of color hardest hit,” she said.
As part of the budget, Breed and Supervisor Shamann Walton worked together to reinvest $120 million of law enforcement funding in the Black community over the next to years in response to the police killing of George Floyd, which inspired a nationwide “defund the police” movement.
“This investment will lead to real change,” Walton said.
But Supervisor Catherine Stefani, the only “nay” vote, said the board arrived at a budget proposal that “is fiscally irresponsible and fails to provide enough support to those who need it most: our small business community and our more than 200,000 newly unemployed neighbors.”
Stefani said that Breed’s proposal “offered a strong starting point with her proposal that closed a historically large budget deficit – without layoffs – and provided $5 million in small business relief.
“But the budget as amended is untenable,” Stefani said.
Stefani’s position drew backlash from her colleagues, who strove for a unanimous vote.
Supervisor Hillary Ronen said that if the board took Stefani’s position then “we would have had to cut hundreds of millions of dollars from life-saving services to the residents of San Francisco.”
The budget committee had made about $50 million in general fund changes to put toward other spending priorities and decided to use $59 million in reserve funds to pay for the raises of city workers that are scheduled to go into effect in December, among other things.
Breed had called for labor unions to forgo raises in her budget proposal or face layoffs. Police and fire unions struck a deal over their pay raises; other labor unions refused to negotiate, and the board instead made changes in Breed’s proposal to fund 3 percent wage hikes in the current fiscal year using reserve revenues, totaling $36.9 million.
Police and fire delayed their 3 percent wage hike and could also see new wage hikes in 2021 and 2022 under an agreement pending approval before the Board of Supervisors.
Fewer has defended the board’s use of the reserve, noting there remains a balance of more than $750 million in reserve funds.
The savings from the proposed labor agreements with police and fire total $12 million this fiscal year, $29 million next fiscal year and $11 million the year after, said a Sept. 15 memo from the Department of Human Resources to the Board of Supervisors. The memo noted that “the remainder of the City’s labor organizations declined to engage in discussions.”
Supervisor Matt Haney praised the board for funding the raises.
“Our frontline workers, our city workers, our nurses, the people who are literally saving lives right now, it means so much … that we are having their backs,” Haney said. “They should not take a hit in this moment. We have a reserve. We have prepared for this. We have made commitments to them. We should honor those commitments.”
Members of the board acknowledged there was a lot of uncertainty in the budget. Should the business tax reform measure, Proposition F, not pass on Nov. 3 the board would need to reopen the budget to address a shortfall of $150 million in general fund dollars, they said.
There is also uncertainty about how much tax revenue The City may see in the coming year from industries hammered by the COVID-19 pandemic, including hotels, tourism and businesses.
“We are not really done,” said Supervisor Rafael Mandelman. “There is a tremendous uncertainty. We are going to have another budget to do next year. We may have to do work on the budget before then.”
The full board will take a second and final vote on the budget proposal next week.