Sometimes small numbers matter. Did you know that a human and a chimp share 98.8 percent of their DNA (and, it seems, even more among people who fulminate regularly in online forums)?
Clearly, the small numbers here make a big difference. Speaking of small numbers, San Francisco Mayor Daniel Lurie will go public with his budget proposals on Friday. Yes, we meant to say that: Small numbers. San Francisco’s budget is big, nearly $16 billion. But the portion the Board of Supervisors can redirect between June 1 and June 30 is comparatively small.
By the time the mayor — any San Francisco mayor — unveils his or her budget proposal, perhaps 99+ percent of it is already baked in. And then, over the course of the next month, the mayor, the Board of Supervisors and various community groups or vestiges of city government wrangle over the last fractions of a percent.
Clearly, the small numbers here make a big difference, too, in part because a small percentage of a big number is, itself, a big number. The amount of money that is yearly reallocated during the Board of Supervisors’ add-back process is often several-score millions of dollars.
That’s a lot of money, especially if placed in two piles. But it’s well less than 10 percent of the discretionary portion of the general fund, and barely more than 1 percent of the overall budget.
Does it make sense to spend a fraught month of 11 p.m. cold pizza dinners micromanaging a sliver of a sliver of the budget while the rest sails through largely unscrutinized? Objectively, no. But that’s how it’s done and that’s how we’ve always done it.
This year’s budget is, in many ways, unlike any we’ve seen in ages. A $781.5 million projected two-year general-fund deficit is no joke. Even less of a joke is the awfully real possibility of vindictive, crippling cuts from the federal government.
Mission Local is informed that, on top of stiffing San Francisco some $268 million in requested FEMA funds, the federal government told the city this week that it will additionally attempt to claw back some $141 million that it already paid out.
So that’s bad. And, for the first time since the Great Recession, a San Francisco mayor is proposing laying off city workers; Mission Local is informed that Lurie is looking to give the payroll a roughly 1,400-job haircut. Only around 70 to 130 of those jobs are apparently occupied by permanent civil servants. The other 1,250+ or so are vacant.
Many of them are still budgeted, however, so this would be a great way to save money (cutting vacant positions is not a novel budgeting technique, but this is a lot of vacant positions). Labor sources told Mission Local that they were informed that projected savings from cutting occupied positions is in the vicinity of $20 million yearly ($40 million over two years), though it’s not yet clear how many positions this number accounted for.
Regardless, doing rough math, this could put the overall savings from cutting the occupied and vacant positions at scores of millions of dollars, perhaps up to $200 million over two years. That’d be an appreciable percentage of the two-year deficit.
These are big numbers. But these don’t figure to be the numbers the Board focuses on in the coming days and weeks.
If the supes aim to save imperiled workers’ jobs by coming up with millions in alternate cuts; that is a time-consuming endeavor. It’ll be even more time-consuming if it is performed concurrently with saving the many community-serving organizations or institutions that are, yearly, defunded by the mayor only to be re-funded by the board.
And while that time is consumed, the vast majority of the budget sails through. Every year.
Why does San Francisco budget this way? Perhaps the best way to explain it is through a joke my uncle likes to tell (but not around my aunt).
Q: Why do Jewish men die before their wives?
A: Because they want to.
San Francisco has a strong mayor system, and never is this more evident than during budgeting. We’ve said it before and we’ll say it again: There are youngish public policy school grads wearing Allbirds who have more influence on the budget than any and all of the supervisors. They work for the mayor and so do all the department heads.
The Board of Supervisors has a circumscribed role in budgeting, and mastering, modifying and ratifying this massive document in a matter of weeks is a lot to ask. Which gets to the bigger question: Why only spend weeks? Are there supervisors who spend months and months immersing themselves in budget arcana, and influencing where things end up come June? Yes, there are. But this is not mandatory. It’s optional.
Why do so many supervisors not get involved in the budget process until the two-minute warning? Because they don’t want to.
Especially in years like this, the budget process is not pleasant. It’s an exercise in telling your friends and supporters “no” and taking away their money. It’s a series of Sophie’s choices. You’re not Santa Claus. You’re the repo man.
Have you ever meant to move some money from an essentially zero-interest checking or savings account into mutual funds, only for the market to tank? Because of your laziness and procrastination, you actually saved a ton of money! Congratulations!
The city of San Francisco finds itself a similar beneficiary. Our city’s hiring process is legendarily sclerotic. Steps have been taken of late to improve things, but we needed enough steps to conk out a pedometer. In 2019, the Department of Public Health reported that it required 220 days to hire a nurse, and 419 to onboard a behavioral health technician. Speaking of steps, the hiring process required 34 of them. Mayor Lurie instituted a hiring freeze in January, but the city’s hiring process was already hovering just a bit above zero Kelvin.
When it comes time to cut the budget, however, our ineptitude in this field is transformed into a saving grace. Filled positions have a lot more of a constituency arguing for them than unfilled ones. And, thanks to our inability to fill positions, we have a lot of them to trim.
So … congratulations? Sadly, however, scleroticism and ineptitude is usually not a saving grace. And that’s the case in this year’s budget, too.
San Francisco’s looming deficit and commensurate fiscal reckoning has been no secret, but you wouldn’t know it from looking at the fat ‘n’ happy last couple of budgets. You can’t, for all intents and purposes, cut a $1 billion deficit in a single year, so it’s disappointing the city didn’t start shrinking to a new normal years ago.
It certainly would’ve been easier: We had record reserves, ample federal funds and didn’t have an adversarial loon in the White House. In deferring those decisions, we have made for bigger problems in the present and future, which will have to be addressed with fewer resources. The ability to engineer a soft landing has been compromised.
And this was noted at the time. In his June 2023 revenue letter to the mayor and board, then-controller Ben Rosenfield lamented that the budget relied on one-time sources and drew heavily from reserves and dwindling federal relief. This resulted in “larger gaps left than we hoped,” and portended “hard times ahead for the city, and hard choices for the mayor and board.”
San Francisco has faced massive deficits before. San Francisco has also laid off workers before; many, many more workers in the recession years under Mayor Gavin Newsom.
But San Francisco has never before faced a massive deficit when it’s not a recession. San Francisco has never before had to cope with the implosion of its downtown office core as a financial money-generating machine. And San Francisco has certainly never dealt with the possibility of Medicaid dollars or other federal funds being yanked by the White House simply for cruelty’s sake.
City officials engineering past hardship budgets and ameliorating past massive deficits were able to just try to “bridge to the other side” and know that the city would, sooner or later, turn things around.
But now there is no other side. And the world could soon look a whole lot worse.
1/16 equals 6.25%. You said you can’t cut 1 billion or make up 1 billion in one year?
Do you know how many corporations and businesses have to cut more than 6.25% at any given time to make ends meet and for the businesses to survive? That’s the real world. But, not in government.
Michael —
San Francisco’s budget, or those of a private entity, do not work like Uncle Scrooge’s Money Bin. You can’t just move money around willy-nilly. So, the city’s General Fund is around $7 billion and the actual discretionary dollars in the general fund is actually closer to $2.3 billion. Cutting up to half your discretionary dollars is not feasible.
Respectfully, while this isn’t particle physics, it’s a bit more complicated than grade school math.
Yours,
JE
“You can’t just move money around willy-nilly.”
Oh, just declare yourself a “non-profit” and it seems much easier…
Sir or madam —
Do you want to try to take another run at what you’re trying to say?
JE
We elected a DOGE person, a republican in sheep’s clothing.