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Politics & Policy

San Francisco mayor says budget cuts ‘cannot wait’ as $500M deficit looms

San Francisco Mayor London Breed said the city has experienced "significant delays" in FEMA reimbursements and seen health care costs "escalating much faster than expected." | Source: Jason Henry for The Standard

Two months after Mayor London Breed and supervisors passed a record-high budget of $14.6 billion despite signs of future deficits, San Francisco department heads are now being tasked with making immediate cuts to address an expected general fund shortfall.

In a letter sent to department heads Wednesday, Breed called on departments to propose cuts of at least 3% to help the general fund prepare for an economic reality that “remains challenging.” Breed wrote that the city has experienced “significant delays” in reimbursement from the Federal Emergency Management Agency for costs incurred during the pandemic, while health care costs are “escalating much faster than expected.”

Breed said that the city “simply cannot wait until next year’s budget process to begin to address our growing structural deficit, which at this time, we project to be at least $500 million in Fiscal Year 2025-26 alone.” 

"This reflects the kind of difficult situation we're in around uncertainties with revenue, different revenue sources and having to hold funding for different reasons," a spokesperson for Mayor Breed's office told The Standard in a phone call. "To be prudent, the mayor has directed for budget staff to work with departments now instead of waiting for the next budget process so that we're on stronger physical ground now, versus having to solve everything come June."

Steps for departments to address the budget shortfall include: limiting the expansion of existing contracts and programs; pausing programs that haven’t started; eliminating some jobs that are vacant; identifying new funds from the state and funds that can offset general fund expenses; reviewing the procurement process; taking a harder look at the performance of contractors; slashing projects that are not performing; and eliminating or deactivating unused cell phone lines, email licenses or other employee devices that are no longer being used. 

The mayor’s budget team is working with the City Controller’s Office and the Budget and Legislative Analyst to release a more detailed financial forecast in the next month, with additional instructions coming in December.

“We remain in a dynamic recovery,” Breed wrote, “and we must adapt to changing circumstances as we move our city forward.”