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Politics & Policy

Explainer: How SF hammers out its $27.8 billion, two-year budget

Mayor London Breed just announced her vision on how to spend $13.95 billion in the next fiscal year keeping the city running while addressing key priorities.

The budget—$27.8 billion spread over two years—includes funding for new police officers, new shelter resources for people experiencing homelessness, economic help for small businesses and families with children, and better pay for city workers and contractors. 

But the mayor’s pitch is only part of the final act in the city’s lengthy budget process. Ultimately, it’s up to the Board of Supervisors to review and amend the mayor’s proposal. 

So what exactly happens from here? The Standard breaks down how San Francisco decides how to spend its money. 

The Two-Year Cycle

What should I know first? As mandated by 2009’s Proposition A, San Francisco uses an overlapping biennial budget cycle. Biennial budgets are growing more popular in California because they allow for longer-range planning and more certainty in what gets funded. 

  • The city drafts a budget every year. But some parts of the process—such as an ordinance for enterprise and other select departments and a five-year financial plan—only happen once every two years. 
  • The budget itself spans a two-year cycle, meaning that San Francisco annually writes a spending plan for the following two fiscal years.
  • Most departments also have overlapping budgets. That means they write budgets two years ahead but revisit them each year.
  • A handful of departments use fixed two-year budgets, according to the Controller’s office. 

Budget Instructions

When do things kick off? The cycle begins when the mayor issues Budget Instructions to city departments in December. These offer general direction on the mayor’s policy priorities, as well as economic conditions that could affect spending. 

  • Last year, Mayor Breed’s instructions drew a grim, Covid-driven financial picture affecting future revenues, but also a forecast of a $108 million surplus. That surplus was attributed in part to a rise in real estate tax revenues, along with sharp drops in revenue from business and other taxes
  • The Controller issues Budget Status Reports to supplement the Budget Instructions. They give updates on the economy and the condition of the city’s general fund. 

Departments: Draft Budgets and Public Input

Departments develop draft budgets as part of the next stage in the process. City code mandates time for public input. 

  • Departments must submit draft budget proposals to the mayor by Feb. 21. After that, they submit their plans to both the Mayor’s Office and the Board of Supervisors by March 1. 

Mayor’s Big Budget Proposal

Between March and June, the mayor’s office prepares a unified Budget and Salary Ordinance for submission to the Board of Supervisors

  • By May 1 on even-numbered years, the mayor submits a separate ordinance for enterprise departments, including SFMTA and other select agencies. Since 2022 is an even-numbered year, that ordinance has already passed through committee. 
  • The mayor’s office also engages in public outreach during this period. For example, the mayor hosted a town hall on the budget in 2021 and held smaller events this year.  

Board of Supervisors: The Main Event

When do things get interesting? That typically happens when the Board of Supervisors starts vetting the budget ordinances. At this stage, the mayor and supervisors grapple over differing policy priorities, starting with the board’s Budget and Appropriations Committee. 

  • The proposed budget includes funding to hire and train more police officers, including smaller and more frequent academy classes, as well as pay incentives for new cops, which is likely to provoke progressives. 
  • The mayor’s office and supervisors will also likely debate differing visions on dealing with homelessness and how to pay for behavioral health services and affordable housing.
  • In even-numbered years, enterprise departments make early budget presentations to the Budget and Appropriations Committee, typically in May. That committee hears reports on those budgets from the board’s Budget and Legislative Analyst, and may amend them based on recommendations.
  • The process repeats for the citywide budget ordinance in June. The committee spends several sessions over two weeks reviewing department budgets before releasing a Proposed Spending Plan
  • The committee offers amendments to the budget based on their own priorities and sometimes emerging events that introduce budget needs. This culminates with a day of public comment scheduled for June 24 this year, and a day of final deliberations scheduled for June 27.

Final Budget and Signature

The committee then submits the budget ordinance to the full Board of Supervisors, which typically continues the item for one week on first reading, to allow for more public review.

  • The budget is then normally approved by the board, and then comes back for a second reading. 
  • Once approved on second reading, the board sends the approved budget to the mayor for signature by Aug. 1.