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City office projects $170M shortfall next year, cites transfer‑tax boom and state/federal risks
Summary
San Francisco Controller Ben Rosenfield told the Budget and Finance Committee the city faces a projected $170 million general fund shortfall in the coming fiscal year that grows in later years; gains from a historic transfer‑tax year could fund reserves but long‑term pension, health and state/federal funding risks keep the plan precarious.
Ben Rosenfield, the city controller, told the Budget and Finance Committee that a joint report from his office and the Mayor’s Budget Office projects a $170,000,000 general‑fund shortfall for the next fiscal year and significantly larger gaps in subsequent years. "Our offices now project $170,000,000 general fund shortfall next fiscal year," Rosenfield said, adding that the deficits rise under current policy choices.
The report attributes much of the short‑term improvement to stronger local tax receipts, led by an unusually large year of property transfer taxes. Rosenfield said the city expects to collect about $170,000,000 in transfer taxes this fiscal year and projects that number could reach $195,000,000 next year. Under the city's financial policy, about 75 percent of the transfer tax receipts above the five‑year rolling average would flow into a stabilization reserve; he estimated the likely deposit at roughly $20,000,000 if current projections hold.
Why the numbers matter: the joint projection is structured as a status‑quo forecast — it assumes no major service‑level increases and that policy choices already in place continue. Rosenfield warned, however, that the city remains exposed to large outside risks: roughly one‑fifth of the general fund comes from state and federal sources. He cited unresolved state actions (including the redevelopment agencies' dissolution and other adopted but not yet implemented cuts) and federal proposals that could reduce aid to local programs.
The mayor's budget director, Kate Howard, who followed on the expense side, highlighted the city's largest cost drivers: compensation and benefits. She said expiration of furlough days and annualization of negotiated wage increases would materially raise personnel costs and noted that retirement contribution assumptions are sensitive to market performance. "Of that $170,000,000, 111 is related to our employee wage and benefit costs," Howard said, summarizing the scale of personnel pressures.
Committee members pressed for more detail on the state and federal risks and on the assumptions behind revenue growth. Rosenfield acknowledged uncertainty around a preliminary $50,000,000 estimate of state and federal reductions and said the report will be updated as courts, the governor and Congress resolve outstanding actions.
Procedural outcome: after public comment and questions, the committee voted without objection to continue Item 1 to the call of the chair and to file Item 2, the joint report. The committee will use the report as a baseline for May and June budget reviews and for departmental guidance on meeting mayoral reduction targets.
What’s next: department proposals to meet the mayor’s suggested 5 percent reductions are under review; the report and the committee’s deliberations will feed May and June budget decisions and any further guidance the board provides to departments.
