Controller: $59 million improvement narrows San Francisco—s budget shortfall; reserves still below target

The San Francisco Controller's Office told the Board of Supervisors Budget and Finance Committee on March 2 that the city's six-month forecast shows an improvement of about $59,000,000 over the prior projection, narrowing a multi-year shortfall the committee will consider this spring.

"We're projecting an improvement in the current year's ending balance of about $59,000,000 compared to our last projection," Controller's Office presenter Michelle Ellersma said, attributing most of the change to stronger property tax receipts as well as departmental savings and citywide salary savings from hiring delays.

The Controller's Office said the improvement reduces the combined shortfall for the years under consideration to $181,000,000. Ellersma also reported that the city's economic stabilization reserves are projected to be about 6.2% of general fund revenues at fiscal-year end, below the City's 10% target.

Ellersma explained some of the revenue movement as a timing and accounting effect tied to a state-level sales-tax/property-tax shift sometimes called the "triple flip," and noted that the assessor's faster enrollment of prior-year activity has bolstered property-tax receipts. She said the Controller's Office expects to see business tax filing results in April that could change the outlook.

On the expenditure side, the office identified roughly $56,000,000 in net savings driven chiefly by the Human Services Agency and the Department of Public Health; a roughly $11,900,000 citywide net surplus reflects reductions in MOU reserves as departments experience salary savings. Ellersma said the Controller's Office will bring forward overtime supplemental requests in the coming weeks for departments exceeding current overtime budgets and highlighted one-time items totaling several million dollars for specific facilities.

Outside the general fund, Ellersma warned that the Public Utilities Commission's wastewater enterprise is projecting reduced fund balance because drought conditions have depressed revenues.

Committee members asked clarifying questions about earlier deficit estimates and the Controller's staff confirmed that the two-year shortfall projection had been $240,000,000 at the June 1 budget planning point and that the six-month update cut roughly $60,000,000 from that projection. Ellersma said the Controller's Office, budget analyst and the Mayor's Budget Office expect to publish an updated forward-looking forecast the week of March 20 that will cover fiscal 2017 and beyond.

There were no public comments on the item. Supervisor Jane Kim moved to file the six-month status report and Supervisor Katie Tang seconded; the motion was taken "without objection." The committee adjourned afterward.