Mayor Daniel Lurie revealed Monday that he is looking to close the city’s $642 million deficit not through culling the workforce today, but slowing down hiring for years and eliminating vacant positions.
The proposal eliminates over 400 vacant positions that the city had budgeted for but left unfilled, and cuts another nine jobs. That, plus the 127 layoffs announced in the spring, would mean around 550 City Hall job cuts this budget season.
The $16.9 billion budget would also benefit from increased revenue, namely tax receipts received via the city’s 2024 tax reform measure, Proposition M, and increases in public health revenue.
And in line with last year’s budget, Lurie is prioritizing funding for departments attuned with his key initiatives, namely public safety and homelessness.
Lurie increased funding for the police and fire departments, whose staff saw 14 percent salary bumps after union contract negotiations earlier this year, as well as departments most affected by cuts to federal funding, like the Department of Public Health.
“We didn’t tell departments to do more with less,” Lurie said during an announcement livestreamed from the Human Services Agency Mission District office. “We said, focus on what matters most to our recovery and deliver results.”
A large chunk of the city’s savings come from staffing cuts — the 127 layoffs announced earlier, the nine more announced today, and the 414 or so unfilled positions.
Unions have called for no more cuts to city services or personnel. Though this budget has few layoffs, union leaders in April said they opposed cuts to unfilled positions.
“Any cuts to that system will further strain city departments which are already understaffed,” said Bianca Polovina, then-president of IFPTE 21, a union of city workers. “All these things together cumulatively will have the effect of comprising city services.”
Instead of making cuts, unions are hoping that their business tax measure, Proposition D, the “Overpaid CEO tax,” passes on Tuesday. It would raise $300 million a year starting in 2028, and the unions would like the city to spend from its “rainy-day” reserves until then.
But Lurie said that even if Prop. D — which he opposes — passes, he plans to move forward with this budget. “We’re going to be a city that spends what it has and not on future potential ballot measures,” he said, pointing to the fact that the ballot measure’s revenue wouldn’t come until 2028.
The city plans to save an additional $80 million in personnel cuts through attrition — which is when employees voluntarily leave a job, such as for retirement — and potentially more layoffs next year. Lurie’s office plans to save another $130 million by slowing hiring.
The city will invest another $34 million into a reserve to backstop federal cuts to Medicaid and other programs. The fund was initially seeded with $400 million last year, a portion of which was used to cover SNAP cuts and increase funding to immigration legal services.
About a quarter of San Francisco residents rely on Medi-Cal, California’s healthcare program and one in eight rely on CalFresh for food subsidies, according to the mayor’s budget documents.
In anticipation of more federal cuts, the city is also creating a new $100 million reserve specifically for housing and homelessness.
Here are the programs that would see maintained or increased funding:
- Funding for immigrant services will be maintained and an additional $1.8 million in one-time spending will go to support immigrant families.
- Funding will be maintained for maternal and infant health.
- Investment will continue for the “Baby Prop. C” childcare programs.
- Programs for civil legal aid to support households at risk of becoming homeless.
Programs focused on housing and homelessness will get tens of millions more:
- $120 million for homelessness prevention services, including legal services, and subsidies for families and seniors at risk of becoming homeless.
- $90 million for shelter and housing interventions for families and youth to access emergency housing.
- $77 million for drug treatment and mental health services.
- Funds to double SFUSD’s shelter capacity. The mayor’s budget proposal did not detail how much this would cost.
Still, some services are being cut, including several health department clinics. It is not immediately clear from the mayor’s budget proposal which other programs have seen or will see cuts.
While the budget is balanced for the next two years there continues to be a gap in projected revenue and spending in the next five years. This proposal reduces that long-term deficit from an estimated $1 billion to $700 million, a 30 percent reduction.
This means that over the course of the next few years the city will have to make cuts or find additional revenue.
“While the ongoing savings and revenues identified will reduce the 5-year deficit by approximately $300 million, it will not eliminate the structural deficit outright,” the mayor’s budget book reads. “Rising healthcare costs, cost of living adjustments, and inflation on materials and supplies will continue to rise faster than projected revenues.”