Rec and Park warns of rising utility bills and budget gaps; PUC rate changes pose growing risk

Department finance staff told the Recreation and Park Commission on April 17 that updated city financial forecasts and higher utility charges from the San Francisco Public Utilities Commission (SFPUC) have widened the department's expected budget shortfall for the next two fiscal years.

Antonio Guerra, director of administration and finance, summarized a March joint city report that increased the city's projected shortfall and described department-level impacts. Since the department's February budget submission, Rec and Park staff said additional pressures total about $4.9 million in fiscal 2025-26 and $3.1 million in fiscal 2026-27. Those figures assume the mayor proceeds with a paid-parking revenue plan the department included in its budget; the department said paid parking was budgeted as roughly $1.2 million in year one and $9.2 million in year two. Staff warned that if paid parking is not adopted, the shortfall increases substantially.

The largest new cost driver, staff said, is SFPUC billing for water, sewer and power. Guerra and other department staff reported that the department's annual utilities bill rose from about $12.2 million in the recent past to an estimated $15.6 million in the current fiscal year, and that SFPUC projections could push combined water, sewer and power costs toward $29.4 million by fiscal 2029-30 if current rate trajectories hold. Specific drivers cited by staff include recalculated stormwater surcharges (now estimated at about $7 million annually), new allocations for recycled-water billing (including Harding Park) and annual power and water rate increases in SFPUC projections.

Guerra and Commissioner comments: Antonio Guerra said the MOA and JFA budget discussions for Hunters Point had assumed SFPUC costs in earlier projections; the department now faces steeper year-over-year increases. Commissioner Mazzola and others pressed for clarity about how the SFPUC's rate-setting and debt service affect departmental bills; staff said the PUC's capital financing and bond strategy are factors in its rate forecasts and that the PUC has increased staff and debt levels in recent years.

Citywide context and risk: Staff argued that these utility costs are distinct from broader city budget pressures and could require program changes if not mitigated. The department noted the potential for service reductions that would be visible to the public if the combined pressure of revised forecasts and lower-than-expected paid-parking revenue materializes.

Commission response and next steps: Commissioners asked staff to continue pursuing city-level discussions about SFPUC rates and to brief the mayor's office on the department's exposure. Staff said the mayor's office has already asked Rec and Park to reduce a discretionary increase requested in the department's submission by $1.7 million for year one; staff said they continue to work with the mayor's office, the Board of Supervisors and other departments to identify offsets and to refine projections.

No vote was taken; this item was heard as a discussion-only update to the commission. Staff said they will return with further budget amendments and will report potential service impacts to the commission if revenue shortfalls are not resolved.