Nonprofit funding is evaporating. Local government is contemplating layoffs. Parking meter prices might go up. Hell, even the streets might not be as clean, after the city’s latest budget is decided in June.
It could get much, much worse.
San Francisco’s budget deficit could more than double, from an estimated $820 million to nearly $2 billion, Mayor Daniel Lurie told The Standard in an interview.
That’s the latest internal estimate of the fiscal threats posed by President Donald Trump’s administration, which has sought to eliminate or withhold funding for healthcare, education, and more. It’s higher than numbers previously discussed, which have largely focused on the roughly $147 million in Federal Emergency Management Agency reimbursements that were expected in the next fiscal year but the city may not receive. Even that is looking more dire, as the controller’s most recent budget estimate lowered the expected FEMA reimbursement to $80 million.
“We are facing an existential threat in terms of our budget,” Lurie said. “It could be $500 million. It could be a billion dollars more that comes at us in terms of cuts,” on top of the possible $1 billion deficit already announced. “And guess who that will affect the most? It will affect our immigrant community, our LGBTQ+ community, those living in poverty.”
“The attacks coming at San Francisco are my sole focus,” the mayor added.
Lurie’s assessment includes the cost of federal litigation and possible federal cuts to new airport capital projects, plus hundreds of millions of dollars for programs at the Human Services Agency. Medicare and Medi-Cal programs from the Department of Public Health stand to lose $900 million. The estimate doesn’t include multi-year projects underway at the airport and SF Municipal Transportation Agency that are being funded by the federal government.
San Francisco’s budgeting process is well underway. In late February, city departments submitted proposals for 15% in budget cuts, which are now being reviewed by Lurie’s team. Former Mayor London Breed relied on one-time funding sources to shore up the budget, rather than making large cuts. In his public statements on the budget, Lurie has signaled a desire to make deeper structural changes instead.
That will undoubtedly raise the ire of various political camps — from organized labor and nonprofits to constituent groups that want increased spending on transit or affordable housing production.
The latest estimate shared by Lurie may help make his case: Let’s make deep cuts now, while we have the time to make them deliberately, instead of in a rush after the latest White House tantrum.
Trump’s issuance of virtually worldwide tariffs — which he paused Wednesday — is a perfect example of uncertainty in federal leadership leading to economic uncertainty, Ted Egan, the city’s chief economist, said during a public talk Tuesday night at Manny’s.
San Francisco’s economy would be uniquely vulnerable to the tariffs if they continue, Egan said, which would threaten the city’s tax revenue.
“The long-term impact is sort of Econ 101. How much smaller is your economy? How much less are U.S assets worth? How much less are people going to earn because you’ve cut off trade? And for us in the Bay Area, that’s likely to be significant,” Egan said.
“It’s far too early to see” just how bad it could get, he added, “because so much can change.”