Swelling deficit points to layoffs

The San Francisco deficit has ballooned to $522.2 million, prompting Mayor Gavin Newsom to warn of layoffs and order departments to identify deep budget cuts.

A drop in revenue, including property taxes, and increasing expenditures led to the newest budget projection, which was revealed Thursday.

City departments are now scrambling to find new ways to cut 30 percent from their budgets for the fiscal year, which begins in July. The tightening of the spending comes less than five months after a $576 million deficit for the current fiscal year was closed by cutting jobs, reducing services and hiking fees.

Slashing 30 percent from every department in The City — which Newsom said would not happen — would still only save slightly more than $346 million. The mayor also said $130 million has already been identified to offset the deficit, along with planned midyear cuts.

The shortfall, however, could mean more layoffs for city workers. Newsom said the budget deficit includes $105 million of labor-related costs and wage, pension and health increases.

“Two-thirds of the budget is personnel,” he said. “How else do you get there without looking at layoffs?”

Generating more revenue could soften the blow of the cuts. Newsom indicated he has not ruled out tax measures on the November ballot. But he also emphasized the need to approve two of his previous proposals that stalled after meeting opposition, including from members of the Board of Supervisors. Those proposals are charging a fee for people who want to do a condo-conversion right away, instead of having to wait for years, and auctioning off permits to drive taxicabs.

Despite the daunting deficit, Newsom said, “There are certain things that just won’t be cut. I don’t want people to think, ‘Oh, my god, 20 percent of the fire stations are closing or 20 percent of the police officers are going to be laid off.’ Some budgets will actually be bigger next year, not smaller.”

Newsom and members of the Board of Supervisors have become embroiled in heated political debates in the past about funding priorities, most recently about budgets for fire and police. It appears that debate will return.

Controversial cuts debated at the start of the fiscal year were avoided when other revenue solutions were found.

But those controversial proposals, such as temporarily shutting down fire stations, will be debated again,  said Supervisor John Avalos, who chairs the board’s Budget Committee.

“Everybody has to give up a little bit,” he said.

jsabatini@sfexaminer.com

Examiner Staff Writer Mike Aldax contributed to this report.

Budget crunch

$6.6 billion Fiscal year 2009-10 budget

$45 million Deficit projected for current fiscal year

$522.2 million Deficit projected for fiscal year 2010-11

30 percent Amount city departments must cut for fiscal year 2010-11

$576 million Deficit closed for fiscal year 2009-10 budget

25 percent Amount city departments were told to reduce budgets for fiscal year 2009-10 budget

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