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Controller says San Francisco—s six-month report shows improved balance driven by transfer-tax surge; warns on volatility
Summary
City Controller Ben Rosenfield told the Budget & Finance Committee the six-month FY2016-17 status report projects nearly $300 million ending general-fund balance and a $54 million improvement versus prior reforecast, driven mainly by transfer and property tax gains; he warned of continued volatility and department overtime overages.
City Controller Ben Rosenfield told the Budget and Finance Committee on Feb. 14 that San Francisco—s six-month fiscal status shows material improvement for the current year but also continuing uncertainty.
Rosenfield said the city now projects just under a $300 million ending general-fund balance at midyear, roughly $72 million better than the five-year forecast assumptions and about $54 million better than the assumptions underpinning the mayor—s rebalancing plan. He attributed most of the upside to strong property-related taxes and unusually high transfer-tax receipts; December transfer taxes alone generated approximately $72 million, a historically high month. That strength is already fueling a projected $70 million stabilization-reserve deposit for the current year.
Rosenfield cautioned that transfer tax is highly volatile and historically can swing by tens of millions of dollars; the city assumed an incremental benefit of about $18 million from the newly approved luxury-transfer-tax tier for properties over $25 million. He also noted continuing weaknesses in sales, hotel and parking taxes and called attention to departmental overtime pressure in 911, public health, police, fire, sheriff and possibly the PUC — areas that may need board action for reappropriation.
Rosenfield and the mayor—s budget office said the city will reforecast in March and provide another update in May after three quarters of data; they emphasized that projections tighten but uncertainties (federal revenue risk and possible state shifts such as a proposed IHSS transfer) could affect outlooks for the budget years ahead.
Committee members questioned the methodology for projecting transfer tax, the expected share flowing to stabilization reserve versus general fund (board policy routes 75% of growth to the reserve and 25% to the general fund above a threshold), and timing for departments to request permission to reappropriate savings to cover overtime overages. The committee took the report for its hearing and moved to file the item.
