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Controller reports $129M six-month surplus; supervisors warned of health and legal deficits
Summary
The city controller reported a $129 million improvement in the general fund six-month outlook driven by higher property, transfer and hotel taxes, but supervisors were warned of continued uncertainties and departmental shortfalls in public health and the city attorney's office.
The Controller's six-month financial report, delivered to the Budget and Finance Committee, showed a materially improved outlook for San Francisco's general fund but left supervisors cautious about ongoing risks.
Monique Zamuda of the Controller's Office said higher-than-expected collections have produced a projected general-fund ending balance that is $129 million better than previously forecast. "Our projected general fund ending balance for the current year is estimated at $129,000,000," Zamuda said, citing stronger property, transfer, sales and hotel tax collections as primary drivers.
Despite the positive headline figure, Zamuda flagged several sources of uncertainty: backlog in property tax appeals, potential state actions tied to redevelopment and realignment, and litigation over Medi-Cal/ in-home support services that could reduce state revenues to the city. She also noted department-level strains that could require supplemental appropriations; Public Health faces significant hospital expenditure deficits (about $34 million) and the City Attorney's office reported a roughly $3.2 million shortfall related in part to legal work for departments.
Kate Howard, the mayor's budget director, said the city is approaching a two-year budgeting process that includes new financial policies, full funding of capital budgets and many expiring labor contracts. Howard reiterated the mayor's budget instructions asking departments to identify 5% reductions in general-fund support and a 1% reduction in positions in the next two-year cycle to assist structural balance.
Supervisors pressed for detail on the distribution of the surplus and asked for clarifications about baseline transfers to entities such as the Municipal Transportation Agency and library preservation funds. The Controller indicated allocations and recommended reappropriations would be discussed in an updated joint report with the Mayor's office.
The committee did not act formally on the item; Chair Carmen Chu moved to continue the budget update to the call of the chair to allow further review and follow-up with departments cited as having deficits.
