Proposed Budget Invests in People, City Infrastructure & Protects Vital City Services, Developed from Unprecedented Public Input and Collaboration
06/01/11— Mayor Edwin M. Lee today presented his proposed $6.83 billion balanced budget to the Board of Supervisors for Fiscal Year 2011-12, which closes a $306 million General Fund budget deficit.
Mayor Lee took office in January 2011 facing a $380 million General Fund budget deficit and began an inclusive, collaborative approach to solving the budget shortfall. The budget process included an unprecedented level of public input. Mayor Lee partnered with the Board of Supervisors to hold ten Budget Town Hall meetings throughout the City to solicit public input. In addition, Mayor Lee worked with leaders from community-based organizations in budget working sessions and conducted scores of meetings with members of the Board, City Commissioners, labor organizations, business leaders, neighborhood leaders, and advocates resulting in $28 million in changes to the budget before it was submitted to the Board of Supervisors.
“This proposed balanced budget is about building a foundation to keep San Francisco moving in the right direction and keeping our City safe, solvent and successful,” said Mayor Lee. “While our economy is stabilizing, we must continue to steer the City back toward long-term, fundamental financial health. That is why we have developed a Five-Year Financial Plan and are implementing two-year budgeting. I am proud of the investments we are making in the people of San Francisco, in job creation, public safety and the social safety net. There is much more work to be done in the coming weeks, and I will continue to work to make sure that our budget is a reflection of our City’s values.”
The City budget grows by $266 million compared to the current year, driven by growth in employee pension and benefit costs, enterprise department spending related to infrastructure investments, federally-funded mandates including an increase in the health care system’s capacity in preparation for federal health care reform, and the beginnings of a slow economic recovery. The increase was anticipated in the City’s Five-Year Financial Plan, which projects that the City’s revenues will recover slowly as the economy stabilizes.
“The good news is our City is growing: the economy is beginning to recover, the population is growing and unemployment is down from over 10 percent last January to 8.5 percent today,” said Mayor Lee. “It is critical that we put forth a balanced, responsible budget that can help us capitalize on these trends now and in the years to come.”
Nonetheless, the Financial Plan shows that City costs will continue to grow faster than revenues unless structural reform is enacted, driven by increases in employee pensions and benefits. Until the City takes action, it will continue to face large deficits even as the economy grows. The Mayor’s pension reform efforts are the centerpiece of the strategy to reverse this trend.
“While our budget and economy are beginning to rebound, this budget includes a number of difficult decisions and sacrifices. We are not expanding programs—we are scaling back and fighting to keep services stable” said Mayor Lee. “We cannot forget that we are asking for real sacrifices from our City employees and their families to restore stability to the budget, and once again they have stepped up to help their city.”
City departments used three guiding principles as they submitted their budgets: Safe, Solvent and Successful.
A Safe City. Ensuring that our City is safe is the most basic responsibility of government. San Francisco must be safe in the traditional sense of public safety—meaning that residents are safe from crime, and have quick, reliable emergency response. Mayor Lee’s budget includes no layoffs of police officers or firefighters—a significant accomplishment in light of the deep reductions to public safety seen in neighboring cities and counties. The budget also reflects the beginning of a new reality for public safety agencies in California. In the coming fiscal year, State government intends to shift responsibility for hundreds of State parolees and prisoners to local government, increasing pressure on county jails, probation departments and other public safety agencies. This budget includes funding to continue planning and adapting the City’s public safety systems in anticipation of those changes.
A safe city also means providing a basic social safety net for vulnerable populations. In recent months, Mayor Lee held a series of budget meetings with a large group of social service professionals to prioritize programs that show proven results. As a result, funding for specific programs was re-prioritized including meals for seniors, drop-in centers for the homeless, residential mental health and substance abuse programs, and domestic violence prevention. Despite budget constraints, the City is making strategic investments in the social safety net including $39 million in new federal dollars to expand capacity for the health care system and $15.7 million in State and Federal revenue for basic safety net programs such as food stamps, foster care, adoption and employment programs for low-income adults and families.
A Solvent City. In developing this year’s budget, Mayor Lee focused on addressing the needs through next year and put in place the steps necessary to ensure the City’s long-term financial health. In May, the City released its first Five-Year Financial Plan, which includes a road map to restore the City to structural balance by Fiscal Year 2015-16. The five-year financial plan paints a sobering picture, because even though the economy is recovering, budget deficits will continue to grow as costs outpace revenue. Employee wage and benefit costs alone will outpace anticipated revenue growth by more than $230 million within five years. In May, Mayor Lee introduced a consensus proposal for voter approval for the November ballot that will curb pension and health cost increases for City employees with estimated saving between $800 million and $1 billion over ten years.
A Successful City. A successful city is one that creates an exciting, unique and enjoyable environment for its residents and visitors. Despite economic challenges, San Francisco can continue to be successful, and this budget makes investments in the City’s future, even while closing a large general fund budget deficit.
The balanced budget continues to invest in people and infrastructure and includes a spending plan for the first phase of preparation for the 34th America’s Cup, an international sailing event in 2013. The event will bring in an estimated 250,000 visitors to San Francisco, generate more than $1.4 billion in economic activity to support local businesses, and continue the revival of the City’s eastern waterfront. In addition, this budget marks the start of San Francisco’s Local Hire program, which ensures that publicly-funded infrastructure projects in San Francisco employ City residents. This budget continues funding for the landmark JobsNOW! Program, which has created jobs for thousands of City residents and families, and is funding apprenticeship and job programs in the departments of Public Works, Recreation & Parks and Environment to put people back to work. Mayor Lee is also working with the Board of Supervisors to develop a strategy for revitalizing neighborhood commercial districts and filling empty storefronts.
The budget proposes a total of $308 million in infrastructure investment, including enhanced disability access, rebuilding jails, and energy efficiency in City buildings. In addition, Mayor Lee has proposed a $248 million General Obligation bond for the November 2011 ballot to begin reducing the backlog of much-needed street repairs. If approved, it will provide an additional $53 million in the coming year for street improvements.
The City Charter requires the Mayor to submit a balanced budget proposal on June 1st. The Mayor’s Proposed FY2011-12 Balanced Budget is available online at www.sfmayor.org under Policy and Finance.