The San Francisco Board of Supervisors kicked off the process of wrangling and finalizing the city’s budget with the first in a series of hearings that will determine where billions of dollars will go over the next two years.
At a budget committee meeting on Wednesday, Supervisors Matt Haney, Hillary Ronen and Gordon Mar heard presentations from City Controller Ben Rosenfield and Ashley Groffenberger, budget director for Mayor London Breed, who gave a breakdown of the city’s revenue outlook and the allocations proposed in the mayor’s budget.
Breed’s budget proposal, which she previewed last week, sets aside $13.1 billion for the fiscal year ending in 2022 and $12.8 billion for the following year. San Francisco operates on a two-year budget cycle, and its fiscal years end in July.
“We have the chance to make a fundamental change,” said Breed of her proposal, which has a particular focus on COVID-19 recovery and response, public safety and homelessness.
Among the notable line items are $1 billion to create new placements for homeless individuals and families, $300 million for behavioral health services and millions in funding for alternative public safety programs such as street ambassadors in the downtown area and additional street crisis response teams. The budget also proposes a new Office of Justice Innovation that would be housed within the Mayor’s Office, various tax and fee waivers for businesses and low-income individuals, and other economic and workforce initiatives.
Supervisor Ronen, who represents District 9, raised concerns about “duplication” of services between some of the items in Breed’s budget and Mental Health SF, an initiative passed in 2019 that seeks to create, among other things, a central coordinating center for mental health services in the city.
“I’m not exactly sure what the purpose is,” said Ronen, speaking of the proposed Office of Justice Innovation. “We’re creating all of these random street teams, and a whole new unit within the Mayor’s Office and I’m worried we’re falling back into old habits.”
Supervisors also questioned the level of funding for law enforcement in the mayor’s budget.
Breed’s proposal calls for stabilization of San Francisco’s police force, including two academy classes to replace the roughly 80 who retire or leave each year. Supervisor Mar asked how soon the new alternative safety programs, such as street response teams, would result in a reduced need for police officers.
Prior to Wednesday’s hearing, the Board of Supervisors published a list of 386 budget requests totaling $545 million in the upcoming year. Those requests run the gamut, ranging from $25 million to finance affordable housing projects to smaller line items, such as $25,000 to fund a native plant garden at McLaren Park.
Primarily due to federal funding—the city is set to receive about $625 million in COVID-19 recovery funds—San Francisco budget officials were able to balance the city’s budget over the next two years. But there’s still a great degree of uncertainty over what the local revenue picture will look like after that, and how quickly key sources of tax dollars will recover as federal funds dry up.
“Business and hotel [taxes] have a long way to recover,” said Carol Lu, a revenue manager at the Controller’s Office, noting that hotel taxes may not recover to pre-pandemic levels until 2025 or 2026. The office is also expecting 25 percent of the city’s workforce to telecommute permanently, which may affect business taxes long-term.
Another risk is FEMA reimbursement for emergency expenses San Francisco incurred during the pandemic. The city is currently expecting reimbursement of $430 million for disaster costs, including a shelter-in-place program for unhoused individuals that will begin winding down this year.
However, the federal agency undergoes a lengthy process of evaluating, approving and auditing claims—and it’s not uncommon for FEMA to deny some of the reimbursement claims in the end, said City Controller Rosenfield. Either way, it may take years to get clarity on how much of that $430 million San Francisco will actually receive.
“They have a huge amount of claims coming in from all over the country, and it’s going to take some time,” said Rosenfield. “For the Loma Prieta earthquake, it took almost a decade to clear all the [claims].”
Over the next three weeks, the Mayor and the Board of Supervisors will remediate the differing budget proposals, starting with a series of presentations from individual city departments next week.
Hearings and negotiations will culminate in a day of public comment on June 25, followed by final budget deliberations scheduled for June 28. Mayor Breed will sign the budget by August 1.