With an increase of $710 million this fiscal year, it's no wonder San Francisco's budget is fast approaching the $8 billion mark.
As the budget suffers from a structural imbalance — revenue growing at 13 percent while expenses increase 25 percent — the talk of cuts and deficits can be misleading. The budget does not shrink; it increases each year and cuts are made to bring the growing expenses in line with revenue that also is growing, just at a slower rate.
Mayor Ed Lee's $7.9 billion budget proposal is a nearly 10 percent increase over the current year's budget, or $710 million more. The single largest increase is in labor costs.
In the current fiscal year, wages and fringe benefits account for $3.7 billion. In Lee's budget proposal they increase by $246 million, or 6.5 percent, according to an analysis by Harvey Rose, city budget analyst.
The increase in labor costs factors in an additional 751 jobs proposed in Lee's budget, bringing the total number of government employees to 19,919.
Among the largest workforce increases are the ones in the Department of Public Health and the Human Services Agency, due to having to implement the federal Affordable Care Act and adding positions at Laguna Honda and San Francisco General hospitals. The Human Services Agency's 1,750 positions will increase by 120 and the health department, San Francisco's largest department, will increase its 5,800 positions by 338. The police are adding nearly 80 new officers.
Other large job boosts include an additional 29 positions for the City Administrator's Office, 22 for the Recreation and Park Department, and 19 for the Public Works Department.
The next largest increase in spending is $136 million in debt service, for a total of $941 million; followed by a $78.6 million increase in programmatic projects, which is due to $49 million of an overall $105 million purchase of furniture, fixtures and equipment for the new San Francisco General opening in late 2015; and $14.3 million for furnishings for a new public safety building.
With the growth in expenses comes a growth in revenue. Local taxes, such as hotel and property, are expected to increase by nearly 11 percent, or $278.9 million, over the current year for a total of $2.89 billion. San Francisco's share of federal and state revenue increases by $142.6 million for a total of $1.24 billion. And charges for government services will bring in $2.5 billion, a $166 million, or 7 percent, increase.
Part of the reason the budget is so large is that San Francisco is a city and county, which means it has to pay for more operations than most cities, including an airport and hospital.
The Board of Supervisors is expected to approve the budget proposal with adjustments early next month.