San Francisco’s forthcoming city budget will include a $400 million reserve: A financial reservoir to protect the city amid potential cuts from the federal government, according to sources familiar with the budget.
“I have been clear that I will stand up for San Francisco’s communities and our values. As we navigate tremendous uncertainty in the federal and state budget processes, our budget must be part of that work,” said Mayor Daniel Lurie in a statement, in responding to questions about a possible reserve fund.
“With the right planning, we will advance our city’s recovery, and make sure San Francisco is prepared for the challenges that may lie ahead.”
The move comes amid the prospect of impending cuts from the federal government. Just this month, Congressional Republicans proposed sweeping cuts to Medicaid.
Lurie is expected to announce the proposed budget for the next two fiscal years by June 1.
“San Francisco’s government is already facing a structural deficit, and we’ve been working hard to correct the course,” said the Budget Committee chair, Supervisor Connie Chan, referring to the city’s $782 million deficit. “But with the federal government, we are left with no good options.”
And this option is one of them. The new fund will pool money from existing reserve funds. That money would have otherwise gone into the city’s general fund (which is essentially the vast pool for most of the city’s day-to-day functions).
Those reserve funds include dollars from the city’s Healthcare Security Ordinance, which workers pay into but sometimes fail to claim. While unused dollars previously were slated to revert to the general fund, moving forward they would be shunted to the new reserve fund.
The mayor will have discretion over the fund, but any expenditures, if necessary, will be subject to approval by the Board of Supervisors.
A $400 million reserve fund only partially protects the city from federal cuts. San Francisco currently receives more than $2 billion in funding from the federal government, according to the Controller’s Office. That represents about 13 percent of the city’s overall budget.
Approximately half of that, $1 billion, comes via the state budget, the vast majority of which covers the cost of Medicaid reimbursements.
On top of that, several city departments, including the San Francisco Municipal Transportation Agency and the airport, are recipients of some $1 billion in additional one-time federal payments for infrastructure improvements.
See which departments get the most federal funding:
Table by Kelly Waldron. Data from the Controller’s Office. Note: Only direct federal disbursements accounted for in the 2024-2025 annual budget are included. Any funds disbursed via the state budget, including Medicaid reimbursements, as well as some one-time capital grants, are excluded from this table.
“The Trump Administration’s unprecedented, illegal attacks on local governments pose a real threat to our city’s budget,” said City Attorney David Chiu. “It is crucial that we plan for these threats and continue working around the clock to protect the city’s resources. Any additional funding our Office receives will be used to protect the billions of dollars currently at stake.”
Of the $400 million in the fund, $1 million is earmarked for the City Attorney’s Office, according to a spokesperson from the department. The latter has largely led the city’s response to the Trump administration.
“We should see it as a bridging fund,” Chan said of the set-aside. “The truth is, what San Francisco and the State of California must do is fight back against these Draconian cuts.”
If Airbnb, Uber & Lyft dropped their flatulent, frivolous lawsuit against the City and actually paid their frigging taxes, SF wouldn’t have to set aside $420 million in a legal fund. If Broligarchs weren’t so abusive and sue happy, our city could use that money to fund essential community programs and services.
Or they would throw those dollars into the nonprofit patronage sieve.
Meanwhile, SF’s Ethics Department is underfunded and understaffed. Meanwhile newbie Mayor Lurie’s PR/Comms staff of 11? 14? is fully funded by taxpayers and hard working San Franciscans. Priorities!!!
Stop wasting so much on PR and see how that goes.
Why doesn’t everyone in SF throw in $1,000 and we can tell the orange menace to go bye bye . If everyone from newborn to boomer threw in $1,000. We wouldn’t need the federal money .. we could even do a sliding scale , we just need $1,000 average .
a $400 million reserve will only make the deficit $400 million, if my SFUSD public education tells me.
Rey —
Not exactly. This is money that is being appropriated (“escheated” is the technical term) from a fund that would have reverted to the General Fund. So while, in an ideal world, this money could’ve been applied to other things we need, it is instead being held in reserve in the not-unlikely eventuality that federal monies are cut. So there’s definitely a tradeoff here, but it’s not a direct taking of funds that had been earmarked for other uses and doesn’t add to the gaudy deficit.
Yours,
JE
Did Mayor Breed’s FY2025-26 budget, later approved by the Board of Supervisors last year, anticipate or project some of this money going into the General Fund?
I think those funds went into somebody’s pockets or greased a few palms.
With another $400m being banked, hopefully we’ll see a culling of the politically connected city funded nonprofits that refuse to organize residents to resist the rampage of the right wing and which provide public benefits that are de minimus at best.
When these people choose to narrow their base to little more than them and their friends, then they’re vulnerable to a culling. To quote Ronald Reagan: “If there’s going to be a bloodbath, let’s get it over with.”