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San Francisco mayor proposes record spending despite $780M deficit

Mayor London Breed talks about the balanced budget and key priorities for the city in San Francisco, on Wednesday, May 31, 2023. | Justin Katigbak for The Standard

Mayor London Breed’s budget proposal ramps up spending on homelessness and the police department and grows San Francisco's budget by $612 million from the current year to $14.6 billion for the next fiscal year, which begins on July 1.

The proposed increase, unveiled in a speech at City Hall Wednesday, comes as the city faces a projected two-year deficit of $780 million in the general fund, which accounts for its discretionary spending.

In the coming fiscal year, Breed is proposing a 1% increase to $6.86 billion in San Francisco’s general fund; in the following year, general fund spending is projected to breach $7 billion. To offset higher spending, Breed’s budget dips into budget reserves, relies on other sources of funding and lays out cuts in select city departments. 

“I’m really proud that in balancing this budget, we were still able to deliver for our nonprofit workers, our public safety officials and other things, even though we’re facing a budget deficit,” Breed said her speech. 

Mayor London Breed talks about the balanced budget and key priorities for the city in San Francisco, on Wednesday, May 31, 2023. | Justin Katigbak for The Standard

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Breed’s budget proposal will be hashed out at the Board of Supervisors and must be signed by Aug. 1. If the board's Budget Committee Chair Connie Chan’s statement on the budget proposal is any indication, the negotiation process could prove contentious.

“I will go through every line item, and ask each and every city department how they will spend our public dollars and deliver the results we all deserve," Chan said in a statement. "They all will be held accountable, dollar for dollar."

To balance the budget, the proposed spending increase is paired with departmental cuts that include a reduction of certain contracts and decreased salary budgets by eliminating vacant positions. The proposed budget funds salaries and benefits for 33,476 city employees next year, a 0.8% increase in the labor force compared with last year. 

As part of her budget instructions to departments, the mayor required general fund budget reductions of 5% next year and 8% the year after. 

The departments that are seeing the biggest increases in year-over-year funding include the Department of Public Health, the Airport Commission, the Department of Public Works and the Municipal Transportation Agency. 

Those seeing the biggest losses by dollar amount include the San Francisco Port, the Department of Early Childhood and the Office of the Mayor.

Cuts also include reduced funding for the city’s 10-year capital plan. Instead of wholesale elimination of individual programs, departments generally proposed marginal cuts across a variety of programs and spending areas. The city is also dipping into an additional $76 million in reserve funds, as well as $90 million in previously appropriated reserve funds, to close the budget shortfall. 

In order to sustain or increase spending in priority areas while balancing the budget, Breed’s proposal also relies on some creative accounting, like shifting spending to non-general fund revenue sources like state funds and special tax funds.

The budget directs revenue from 2018’s Prop. C, known as Our City, Our Home, toward helping to fund efforts to combat homelessness. As proposed, Breed’s budget increases homelessness spending from $672 million this year to $692.6 million next year. If approved, Breed has said the spending would help create 600 shelter beds and 545 housing units over the next year. 

People in the crowed held up signs around housing including “Family and Tay Housing” during Mayor London Breed speech about the City's budget. | Justin Katigbak for The Standard

That’s tied to an effort to boost funding for behavioral health and addiction initiatives, including the addition of 30 beds for those with both mental health and substance abuse disorders, implementation of the state’s Community Assistance, Recovery and Empowerment (CARE) Court system and three new wellness hubs for overdose prevention. 

The city will rely on a portion of the $350 million settlement gained through litigation against pharma companies and Walgreens to help shift spending away from general revenue and start new programs. 

The budget also allocates around $30 million in revenue from Baby Prop. C, a tax measure to fund early childhood services, to the city’s Food Access Program, which supports food pantries and grocery vouchers. 

On the public safety front, the mayor is proposing increased investment for recruiting at the San Francisco Police Department with the goal of hiring 220 officers in the next two years. Her budget proposal also includes additional hiring and retention bonuses, boosting the number of police service aides and maintaining existing ambassador programs. 

A patch detail on the sleeve of SFPD's Police Chief Bill Scott as seen during Mayor London Breed’s speech about the budget and key priorities for the city. | Justin Katigbak for The Standard

SFPD is getting a $63 million bump to a proposed $777 million annual budget for the next fiscal year. However, the Sheriff’s Department, which manages the county's jails, is looking at a 3% cut down to $292 million next year.

The budget also funds additional prosecutors specifically targeting drug trafficking, along with investments meant to boost 911 dispatcher staffing with the goal of answering 90% of 911 calls in 10 seconds or less. 

Another major priority for Breed is investments in Downtown, which has struggled with high office vacancy rates, low foot traffic and a string of prominent business closures. The budget proposes $5 million in small business grants, the continuation of the First Year Free program for permits and licensing fees and $12 million to help fill empty storefronts Downtown and support the city’s commercial corridors. 

Breed is also aiming to create a more business-friendly environmental, putting forward a number of tax incentives and decrying the city's complicated taxes and fees in her speech.

Mayor London Breed during her speech about the City's budget. | Justin Katigbak for The Standard

The incentives include pausing scheduled tax increases for industries hit hard by the pandemic until 2025, a gross receipts tax discount of up to three years for new offices locating in San Francisco and a pause on tax collection for subleasing commercial space. 

“This budget is about change," Breed said. "This budget is about thinking differently. We know the definition of insanity is doing the same thing and expecting a different result. Everything can’t just be a tax on the ballot.”

Kevin Truong can be reached at
Noah Baustin can be reached at