The State of California isn’t the only one scrambling to prepare a budget while staring down a  deficit . Several Bay Area municipalities are also s

San Francisco’s Financial Crisis

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2023-05-27 02:00:10

The State of California isn’t the only one scrambling to prepare a budget while staring down a deficit . Several Bay Area municipalities are also struggling with their own budget problems, San Francisco chief among them. 

San Francisco’s 2022-23 budget and next year’s 2023-24 budget total approximately $14 billion each. On March 31, the San Francisco Controller’s Office released a budget update addressed to Mayor London Breed and the San Francisco Board of Supervisors reporting that the “shortfall for the coming fiscal year (FY 2023-24) is forecast to grow to $290.9 million.” The report also forecasts a $779.8 million total deficit for the upcoming two fiscal years, and a staggering $1.3 billion deficit by FY 2027-28.  

Factors accounting for the growing deficits include an increase in city personnel costs (salaries and benefits); companies going remote or leaving the city altogether, resulting in hardship for San Francisco’s economy and lower tax revenues; and undisciplined spending on programs to address San Francisco’s increasingly severe homelessness crisis. 

In the city’s Five-Year Financial Plan released in January this year, the Controller’s Office wrote that “growth in salary and benefits [for city employees] has escalated significantly over recent years…[and is] the second largest expenditure driver of the escalating deficit” behind citywide operating costs (which includes equipment and technology, utilities, real estate costs, and more). Current salary and benefit costs across all city funds amount to over $6 billion annually.

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