Budget passage comes with warning signs ahead 

The $6.5 billion San Francisco budget was officially signed Thursday morning with a celebration. But it also came with financial warnings: Midyear cuts could happen within months and deficits are projected for years to come.

The financial uncertainty leaves services and department budgets at risk for slashing if the economic situation worsens and state and federal cuts come in larger than anticipated.

“We know that we are facing continued challenges,” Board of Supervisors President David Chiu said during the budget-signing ceremony in City Hall. “We have budget deficits for the years to come. We have decisions that could come down from Washington, D.C., and from Sacramento that could require us in a few short months to be back at the negotiation table again.”

Mayor Gavin Newsom closed a $483 million deficit when he submitted his $6.5 billion budget proposal June 1 to the Board of Supervisors for review and adoption. Budget negotiations between Newsom and board members resulted in $44 million of funding changes going toward restoring cuts to senior, health and other social services.

Newsom and board members praised the budget Thursday for protecting core services for The City’s vulnerable and ensuring no layoffs of police or fire. San Francisco’s labor unions agreed to $250 million in wage concessions during the next two fiscal years.

However, The City is facing similarly sized deficits in upcoming years, and if previous years are any indication, Newsom will have to make tens of millions of dollars in midyear cuts.

Department heads have already been directed to begin budgeting for next year and look for cost savings throughout the fiscal year.

The financial uncertainty has some politicians arguing in support of tax increases or other revenue-generation proposals like an alcohol fee.

Newsom prided himself on balancing the budget without tax increases and opposes tax proposals on the Nov. 2 ballot.

“We balanced the budget without raising taxes. I’m really proud of that,” Newsom said before signing the budget.

Newsom spokesman Tony Winnicker said that cost-saving measures rejected by the board during budget deliberations could return for consideration during the fiscal year as a way to offset the potential budget cuts, including the controversial condo conversion fee — which would allow a set number of people to pay a fee to bypass a lottery system to be able to convert a housing unit into a condo — and contracting out certain services. Combined, the proposals could generate $34 million in revenue.


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