‘Cautions’ identified in Newsom’s proposed budget 

Hundreds of millions of dollars in funding for Mayor Gavin Newsom’s proposed budget is coming under scrutiny.

Three “important cautions” are being sounded in a city controller’s report about revenue in Newsom’s proposed $6.5 billion city and county budget, while pointing to a challenging financial future.

Newsom’s spending plan includes $123 million in federal funding The City has yet to receive but hopes to, a $30 million contingency for state funding cuts and $19 million in revenue that requires approval by the Board of Supervisors, such as contracting out of certain city services, which prompted the controller to issue the “cautions.”

The controller’s required report on the budget’s revenue comes as the Board of Supervisors five-member Budget and Finance Committee begins holding hearings Wednesday on the budget proposal and will ultimately vote to make changes to the spending plan.

Supervisors have said they are most concerned about not receiving the federal funding and have criticized Newsom for not entertaining tax measures in November as part of the budget solution for the upcoming and future fiscal years. Members of the board proposed three tax measures Tuesday.

Newsom spokesman Tony Winnicker said there’s a “high degree of confidence” in the federal funding coming through. If not, Winnicker said there are contingencies built into the budget and there’s the ability for Newsom to impose midyear cuts. He noted Newsom has proposed contracting out city services to save about $13 million in the upcoming fiscal year, and more in future years, if the board approves them.

“We need to look at greater sources of revenue,” Supervisor John Avalos said. Without new revenue, “we will be in a real bind next year.”

The City’s deficit for the fiscal year beginning July 1, 2011, “will likely approach or exceed $400 million,” the report said.

Newsom’s budget proposal is “reasonable,” the report said, but it also offers “cautionary notes regarding contingent revenues and uncertainty from the State budget situation.”

Also, “replacement of one-time sources and rising health benefit and retirement contribution costs are likely to place stresses on future year budgets.”



Mayor Gavin Newsom’s proposed budget for the fiscal year beginning July 1:

$6.5 billion Total city and county budget

City controller’s three “important cautions”:

  • Unsecured federal revenue: $123 million
  • Only $30 million to offset state funding cuts
  • Assumes $19 million in revenue that requires additional action

$15.6 million Fee and fine increases

$257 million Fiscal amount of one-time sources used to balance budget

$483 million Deficit closed in Newsom’s proposed budget

Budget gap for fiscal year 2011-12 will likely approach or exceed $400 million

Source: City Controller’s Office

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