Mayor’s rep: small deficit misleading 

When Mayor Gavin Newsom submits his proposed $5.3 billion budget to the Board of Supervisors next month it will have a projected deficit of $5 million, the smallest shortfall in recent years.

However, the number will mask "a structural imbalance" between incoming revenues and outgoing expenses, said the mayor’s budget director, Noelle Simmons.

Speaking before members of San Francisco’s Chamber of Commerce on Tuesday, Simmons said that while property tax revenue and property transfer tax revenue — The City’s largest revenue sources — were at "historic highs," city spending continues to outstrip the revenue growth. In addition, rising labor-related expenses will significantly increase The City’s operating budget costs next year, she said.

Nonetheless, The City will begin the new 2006-07 fiscal year in July with only a $5 million budget shortfall on the books, due to a remaining $95 million expected at the end of FY 2005-06.

According to a nine-month budget update report, released by City Controller Ed Harrington last week, the "surplus" is the result of "better revenue growth and expenditure savings" from the previous year that carried over into this year. Although the original fund balance left over from FY 2004-05 was $137.18 million, this year the Board of Supervisors voted to allocate $50 million of that money for violence-prevention programs, street repairs, affordable housing support and for upkeep on parks and recreation centers.

Since the $95 million will be used to offset budget shortfalls in the FY 2006-07 budget, the budget projection for FY 2007-08 will reflect The City’s financial reality with a projected deficit of $130 million.

beslinger@examiner.com

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Bonnie Eslinger

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