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Controller reports roughly $104M citywide revenue shortfall, offset by $198M in departmental surpluses
Summary
At the Budget and Appropriation Committee—s June 5 hearing, the Controller—s Office reported an approximate $104 million citywide revenue shortfall for FY2023–24, offset by about $198 million in departmental operating surpluses; Laguna Honda accounted for an estimated $52 million of the shortfall and FEMA reimbursements remain unresolved.
The San Francisco Controller's Office presented its nine-month budget status update to the Budget and Appropriation Committee on June 5, reporting a net citywide revenue shortfall of about $104 million for the current fiscal year, partially offset by departmental operating surpluses totaling roughly $198 million.
Michelle Eller Smith, a presenter from the Controller's Office, said the shortfall largely reflects persistent weakness in business, sales and hotel room taxes and lower-than-budgeted FEMA reimbursements. That shortfall is counterbalanced by higher-than-budgeted interest earnings, modest gains in property tax, and widespread small savings across departments resulting from midyear cuts and spending restraint.
Eller Smith called out the Department of Public Health as a major driver of variance: Laguna Honda continues to have a low census and a projected current-year revenue shortfall of about $52 million, while the general hospital has higher-than-budgeted patient volume and received some one-time state safety-net hospital dollars that helped offset other shortfalls. She said the Controller expects to introduce a supplemental to move budget authority into overtime for the sheriff and police departments.
Committee members asked about reserve balances. Eller Smith explained the report's Free City College reserve line of $6.9 million reflects prior-year unspent appropriations that were fully appropriated in the current-year budget and therefore project to a $0 year-end balance; the fiscal cliff reserve reflected roughly $90 million of spending in the current year with $130 million remaining from the prior approved budget. She said details on how the mayor—s proposed budget would use reserves will be addressed in an upcoming revenue letter to be published later this week or next week.
On FEMA reimbursements, Eller Smith said the process is ongoing and may require the city to file complaints and pursue decisions through federal processes, which could take time to resolve.
No members of the public spoke on the report. Chair Connie Chan moved that the hearing be heard and filed; Supervisor Shamann Walton seconded. The roll-call vote recorded five ayes (Rafael Mandelman, Myrna Melgar, Shamann Walton, Aaron Peskin and Connie Chan) and the hearing was filed.
