Standing in front of a bank of television cameras Friday at City Hall, Mayor Daniel Lurie spoke somberly of the $15.9 billion budget he had just presented for the coming fiscal year, which includes layoffs of city employees, the first in a decade. “This is a painful budget,” he intoned. “Any job loss is difficult. I take no joy in this.”
As he spoke, a coalition of labor unions representing city employees released a statement condemning the mayor. “Layoffs are totally unnecessary,” said Rudy Gonzalez of the San Francisco Building and Construction Trades Council, whose members include municipal craftspeople. “We can find the funds to save jobs and uphold San Francisco values.”
Only in San Francisco government would the elimination of jobs not currently filled by human beings be considered “painful” or “difficult.”
But neither side’s statement reflects the reality of Lurie’s first budget. In fact, his elimination of about 1,400 overwhelmingly vacant positions, including roughly 100 layoffs that the mayor’s office characterizes as “temporary positions or [those] filled by individuals known to be retiring,” represents a near total victory for labor — and a missed opportunity for the mayor.
Not only is Lurie sacking few actual people relative to the bloated size of the city workforce (33,000 and counting), but he isn’t even cutting most of the unfilled positions. As of two weeks ago, the city had 2,300 vacancies, according to the Department of Human Resources. Only in San Francisco government would the elimination of jobs not currently filled by human beings be considered “painful” or “difficult.”
This moment represents Lurie’s first major failure as mayor. The fact is, there was no better time for him to spend his political capital to win significant concessions from labor, which is responsible for a large portion of the city’s out-of-control budget. Not only is he popular and enjoying the support of a moderate-majority Board of Supervisors, he justifiably could have blamed a round of tough cuts on his predecessor, London Breed, who gave labor a raise during an election year and repeatedly used accounting gimmicks to balance her budgets.
Instead, Lurie cut just enough to buy peace with the unions. And yet, a closer examination of his budget shows that the cuts are even less drastic than both he and labor are making them out to be. For the coming fiscal year, the mayor proposes cutting just 470 “net funded positions,” the city’s term for the financial cost of each job. That represents only a 1.4% decrease from the previous year. In the following fiscal year, he proposes to cut a grand total of four of these positions.
Despite being largely spared from the kind of job cuts required to plug a deficit that is forecast to exceed $1 billion by the end of the decade, labor howled with outrage. Even more galling, they have continued making the specious argument that the city’s fiscal failures are Big Tech’s fault. The unions are pointing the finger at Airbnb, which they insist isn’t paying its “fair share” in taxes because it has filed a $120 million lawsuit against the city to recover taxes it believes were wrongly assessed. But labor is clearly barking up the wrong tree here: Whether Airbnb — not to mention Uber, Lyft, General Motors, and other companies locked in business-tax disputes with the city — owes more or less in back taxes is a question settled by the courts, not by politicians.
Making these companies into bogeymen in an effort to grow contracts constitutes labor at its most cynical and self-serving. But the Big Tech distractions shouldn’t confuse the rest of us. Labor got what it wanted this budget cycle.
(A funny side note about another vital constituency that Lurie caved to: In March, I pointed out that the Board of Supervisors hadn’t complied with a request by Breed, then reinforced by Lurie, to cut 15% of its budget. A board staffer complained at the time that the board’s budget had been stagnant for years and that it needed an increase to pay for a new legislative IT system. Proving once again that Lurie knows how to play politics, the mayor gave the legislators, who must approve his budget, what they asked for. While much of the city is in belt-tightening mode, the board’s budget will grow by 10.5%, to $2.5 million, “primarily due to a one-time technology cost increase,” the mayor’s budget said.)
‘Painful’ layoffs
Laying off city employees is painfully onerous, in part because of arcane seniority rules and existing labor agreements. Yet the reason it was necessary for the mayor to aggressively winnow the city’s workforce now is that it’s the one factor over which he has some degree of control.
The verbiage in the mayor’s 343-page “budget book” describes the major factors in the structural deficit that this year’s balanced budget doesn’t solve: “continued office vacancies due to remote work; rising city workforce costs; declining hotel tax revenue; and instability in property tax revenues.”
Of these, the only variable that isn’t driven mainly by market forces is the rising cost of the municipal workforce. In other words, while the mayor can’t make companies kill remote work or induce foreign tourists to book summer trips to San Francisco, he can dictate how many people the city employs. In this sense, the mayor’s budget document is both transparent about the problem and forthright about the lines he refuses to cross.
The current plan “will not eliminate the structural deficit outright,” which means there will be future “reductions and consolidations.” Favoring message management over tough medicine, the document concludes that in “balancing this budget, the Mayor recognizes the hard work of its frontline city workers in keeping the city’s residents safe, streets clean, and social services intact.”
That nod to future “reductions and consolidations” is likely prescient — but it didn’t have to be that way. The time to strike at overly generous contracts, indulgent (yet stubbornly contested) work-from-home rules, and a spiraling pension-cost burden should have been now.
This current budget — which is to be debated and must be approved by the supervisors — reflects the city Lurie inherited this year. More dramatic cuts to the workforce to help balance the budget easily could have been pinned to the regime running the shop before his arrival.
But by passing up the opportunity to make personnel cuts as drastic as the times require, it’s all Daniel Lurie’s budget now.