SF budget gap grows

San Francisco thought it had pulled its budget hole down from nearly $937 million to about $643 million in late March. Two weeks later, City Hall was still sending layoff notices, with 127 workers cut across 18 departments and more reductions expected before the June 1 budget deadline. (sf.gov) (kqed.org) The number getting quoted now is $642.8 million over the next two fiscal years, which covers the budget San Francisco is legally required to balance. The city’s own March 31 update says that is smaller than the $936.6 million gap projected in December, but still “large by historical standards.” (sf.gov) That drop did not come from a boom. It came from a few better-than-feared lines on the ledger: stronger General Fund revenue, more public health revenue, lower retirement contributions, and a healthier current-year fund balance. (sf.gov) Even with that improvement, the city says the problem is structural, which is budget language for “this keeps coming back every year.” The same March update projects the long-term shortfall growing past $1.08 billion by fiscal year 2029-30. (sf.gov) One reason the politics are getting uglier is that almost half of the current two-year gap is tied to Washington. San Francisco’s March update says federal policy changes in House Resolution 1 account for an estimated $306.3 million hit, or just under half of the $642.8 million shortfall. (sf.gov) The city was already in austerity mode before the latest round of cuts. In December, Mayor Daniel Lurie’s office told departments to find about $400 million in reductions, and Mission Local reported that layoffs were explicitly on the table. (missionlocal.org) This is the second straight budget cycle shaped by a giant hole. In July 2025, Lurie signed a $15.9 billion two-year budget after City Hall said it had closed an $800 million deficit, and Board President Rafael Mandelman said that deal avoided layoffs while trying to chip away at the deeper imbalance. (sf.gov) Now the layoff fight is no longer theoretical. KQED reported this week that more than 100 city workers got notices, and ABC7 reported the administration is planning to eliminate about 500 roles while freezing roughly 2,000 vacant positions. (kqed.org) (abc7news.com) That is why unions are treating the smaller deficit number as almost beside the point. The budget gap got better on paper, but the mayor still has to submit a balanced budget by June 1, and the easiest fast savings in a city budget usually come from payroll, vacancies, and services people notice when they disappear. (sf.gov) (missionlocal.org) So the real fight over the $643 million figure is not whether it exists. The fight is over which parts of San Francisco get smaller first: the workforce, the services, or the ambitions City Hall kept funding when interest rates were low, downtown was fuller, and federal money was easier to count on. (sf.gov) (kqed.org)