Name: San Francisco reports $125 million budget surplus this fiscal year - but deficits still loom
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San Francisco reports $125 million budget surplus this fiscal year - but deficits still loom

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San Francisco announced a $125 million in the city’s budget halfway through the current fiscal year on Friday, reversing the city’s short-term financial fortunes from a $116 million deficit three months ago.The gap was filled by higher-than-expected property tax revenue, increased federal reimbursements and lower expenses. Friday’s update was a rare bit of good news for the city’s $13.1 billion budget, which has been ravaged by the pandemic over the past year. But the city still likely faces a more than $500 million deficit over the next two years, which will need to be bridged somehow.The Board of Supervisors and Mayor London Breed two massive holes in the fall and winter, but still managed to avoid service cuts and layoffs — whether that will be possible over the next few years isn’t yet clear. The city has 36,000 employees.“These are tough times, but could be much worse,” Supervisor Aaron Peskin said. “We’ve fallen off a cliff, it just turns out to be a shorter cliff.”Related StoriesSupervisor Matt Haney, chair of the budget committee, said in a statement Friday that the $241 million swing from late last year comes “as a huge relief for our city’s struggling residents and small businesses who need our support right now to rebuild and recover with urgency.”Although the unexpected glut saves the city in the short-term, an uncertain economic future remains, especially withthat will likely leave downtown offices emptier and diminish San Francisco’s tax base.In December, Controller Ben Rosenfield projected the city would face a over the next two fiscal years, starting in July, due to lower-than-expected sales, hotel and business taxes.The new surplus could reduce that deficit to $528 million, the six-month budget report said, unless the Mayor and Board of Supervisors decide to spend it on other priorities in the current year.The Mayor’s Office said Friday Breed intends to use the new surplus “responsibly” on helping small businesses, supporting arts and cultural programs, and reducing future deficits.“This revenue is a welcome surprise that will help us address the immediate impacts caused by the pandemic,” a statement read. “Unfortunately, we don’t expect these funds to continue in future years and we still have a number of difficult choices ahead of us in order to avoid layoffs and maintain City services.”In December, Breed asked departments to propose cuts of up to 10% in the upcoming budget cycle. The mayor will review all the proposals and weigh the trade-offs against any new financial news, spokesman Jeff Cretan said.Half a dozen supervisors who spoke to The Chronicle Friday expressed optimism and a desire to support small businesses and struggling residents.Haney said that the city has a $507 million COVID-19 reserve fund to help cover deficits over the next two years and expects hundreds of millions more in new federal stimulus funds. He said the city should “cut the wasteful and inefficient spending, but get money immediately to those residents and small businesses that need it.”“Our city is still in crisis, and this is a time for action,” Haney said. “Too many of our residents and small businesses have been told over the last year that despite their suffering, our city didn’t have the resources to support them. Now, we have a chance to begin recovering now.”Supervisor Hillary Ronen said she would fight to provide more assistance to small businesses, artists, low-income families, and individuals battling mental illness, addiction or homelessness. Supervisor Ahsha Safai wanted to support business fee waivers and a city program that’s Supervisor Shamann Walton listed tackling the pandemic, homelessness, food insecurity and violence among his priorities.Peskin supported immediate relief for small businesses, but also urged caution with the amount of more federal funding uncertain.Updated to include drought zones while tracking water shortage status of your area, plus reservoir levels and a list of restrictions for the Bay Area’s largest water districts.“You can’t spend it all at once unless you know you’re getting more in the future,” he said.The budget got a boost from the Biden administration’s announcement last month that it would fully reimburse cities for pandemic-related emergency programs, such as testing, personal protective equipment and emergency shelters like the city’s homeless hotel program. The order is retroactive, which means all eligible expenses starting in January 2020 will be reimbursed.News about the extra federal support renewed calls from some supervisors to expand the city’s homeless hotel program. The city’s homeless department originally planned to begin winding down the program last year, concerned that the funding from the Federal Emergency Management Agency would suddenly end, but now the Biden administration has assured the city that will be funded through September.That news prompted Haney to propose legislation this week that would force the city to bring more people inside from off the streets.Another unexpected budget bright spot was funding from Prop. I, the city’s 2020 voter-approved tax hike on the sale of properties worth more than $10 million. The six-month budget report lists increased revenues of $26.1 million from that tax.Supervisor Dean Preston, author of the measure, was adamant Friday that the tax revenue be spent on its stated purpose: affordable housing and rent relief for those hurt by the pandemic.“As we navigate this budget cycle, we need to make sure our city delivers for those struggling the most in this economy,” he said.Trisha Thadani and Mallory Moench are San Francisco Chronicle staff writers. Email: , mallory. Twitter: ,Updated to include drought zones while tracking water shortage status of your area, plus reservoir levels and a list of restrictions for the Bay Area’s largest water districts.

San Francisco announced a $125 million in the city’s budget halfway through the current fiscal year on Friday, reversing the city’s short-term financial fortunes from a $116 million deficit three months ago.The gap was filled by higher-than-expected property tax revenue, increased federal reimbursements and lower expenses. Friday’s update was a rare bit of good news for the city’s $13.1 billion budget, which has been ravaged by the pandemic over the past year. But the city still likely faces a more than $500 million deficit over the next two years, which will need to be bridged somehow.The...

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Trisha Thadani is a City Hall reporter for The San Francisco Chronicle. She previously covered work-based immigration and local startups for the paper’s business section.  Thadani graduated from Boston University with a degree in journalism. Before joining The Chronicle, she held internships at The Boston Globe, USA Today, The Wall Street Journal, and was a Statehouse correspondent for the Worcester Telegram & Gazette.

https://www.sfchronicle.com/author/trisha-thadani/

Trisha Thadani

Mallory Moench

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San Francisco reports $125 million budget surplus this fiscal year - but deficits still loom

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