San Francisco Implements Budget Cuts
City departments in San Francisco are eliminating discretionary programs and restructuring operations to comply with a $400 million budget reduction. The cuts, ordered by Mayor Lurie in December, also include a reduction in citywide work orders as the city grapples with its financial shortfall.
The city's directive to cut $400 million is part of an effort to close a projected two-year budget deficit of $936 million. Without these and future reductions, this deficit is projected to grow to $1.2 billion by the 2029-2030 fiscal year. The shortfall is attributed to a structural deficit where city spending has consistently outpaced revenue, a situation worsened by the expiration of COVID-19-era subsidies. Mayor Lurie's strategy is to pare back city functions to focus on what his office defines as "core" services. This includes prioritizing public safety, clean streets, transit, and addressing homelessness, while programs outside these areas face potential elimination. Consequently, public safety departments like the police and district attorney's office were largely spared from cuts and received budget increases. The budget cuts are not applied evenly across departments, a departure from the previous administration's approach of ordering flat percentage-based reductions. Instead, the mayor's budget team is meeting with department heads to decide which specific programs to keep or eliminate based on their alignment with "core" priorities. This could lead to layoffs, and all new hiring has been stopped as contracts are reviewed for potential savings. Areas facing significant reductions include arts and culture, youth and elder enrichment programs, and various forms of advocacy work. For instance, the Environment Department's general fund allocation is proposed to be cut by nearly 80% compared to the 2022-2023 fiscal year, a reduction from nearly $3 million to about $545,000. This specific cut to the Environment Department is projected to eliminate eight positions and scrap the Climate Equity Hub, a program that helps low-income residents switch from gas to electric appliances. Hundreds of climate activists have protested the move, arguing it jeopardizes the city's goal of achieving net-zero greenhouse gas emissions by 2040. Other programs facing complete elimination of city funding include the Workers Rights Community Collaborative, which defends low-wage workers. Additionally, a $4.8 million budget item for nonprofits that conduct code-enforcement outreach in residential hotels and apartment buildings was zeroed out, a move that could impact tenants in unsafe living conditions. The financial pressure is also compounded by a reduction in federal funding. Changes in federal health programs are expected to cost the Department of Public Health between $90 million and $180 million annually starting in fiscal year 2027-28. The Human Services Agency is projected to lose $26 million a year due to the federal government reducing its share of administrative costs for CalFresh. To address the deficit, the mayor’s $15.9 billion budget for fiscal years 2025-2027 eliminates over 1,400 positions, most of which are currently vacant. It also seeks to find $171 million in ongoing annual savings from grants and contracts as part of a broader plan to stop using one-time funds for recurring expenses.
