San Francisco's financial outlook took a turn for the worse as city officials revealed a growing two-year deficit during a recent government meeting. The update, delivered by the mayor's office, controller's office, and the office of the budget and legislative analyst, highlighted a significant drop in revenue projections and rising costs associated with employee health and pensions.

The city is currently engaged in labor negotiations with police, firefighters, and in-home support services unions, which could further impact the financial forecast. Additionally, several pending policy decisions could have fiscal implications, including addressing staffing shortages in the police department and maintaining community ambassador programs.

In response to the financial challenges, Mayor London Breed has instructed city departments to propose budget cuts of at least 5% annually, with a deadline set for April 7. For the health department alone, this reduction could mean a savings of approximately $50 million. The mayor's office has allowed the health department to submit its proposal after the upcoming health commission meeting on April 18.

This update underscores the city's increasingly difficult budget environment, with officials promising to keep the public informed as the situation develops. Further discussions and updates are expected in the coming weeks.