Mayor’s budget office warns of multi‑year deficits; lists redevelopment, state cuts and pension reform as key risks

Rick Wilson, the mayor’s budget director, updated the Budget and Finance Committee on the city’s fiscal outlook, saying the city is three months into fiscal year 2011‑12 and is ‘‘just starting up the planning process’’ for the next budget cycle. He told supervisors the administration closed a projected deficit earlier in the year but that structural pressures remain, driven largely by employee wage and benefit costs.

Wilson said the administration has set aside a $15,000,000 general‑fund reserve for state budget impacts and a $2,600,000 reserve in the children’s fund to blunt recent state cuts, but warned those buffers may not be sufficient if the state moves forward with reductions. On redevelopment, he said the city received notice the potential payment obligation is lower than earlier estimates — about $15,000,000 if required — but that a court stay remains in place until Jan. 15. "We just got news that it's gonna be 15,000,000 if we are indeed required to make that payment," he said.

Wilson laid out a preliminary five‑year outlook showing a widening gap between revenues and expenditures driven by rising personnel costs. His base‑case projection for next year is a roughly $350,000,000 general‑fund deficit, which assumes full funding of the capital plan and the expiration of one‑time savings embedded in the current budget. He said the city could close part of that gap if voters approve two November measures: pension and benefit reform (which he estimated would yield about $45,000,000 in savings the following year) and a half‑cent sales‑tax restoration (roughly $60,000,000 annually).

Wilson described possible responses: labor negotiations (27 labor agreements expire June 30), continued restraint on capital spending, restructuring debt to achieve savings and departmental reduction targets. He repeatedly stressed uncertainty — particularly the outcome of state actions and federal fiscal negotiations — and said the administration will continue to brief the committee as new information becomes available. "We're a third of the way into fiscal year 'eleven-'twelve... I think the bottom line of this is... we're going to be issuing targets and gonna be looking for our departments to come in with recommended general fund reductions," he said.

The committee opened the item to public comment; one commenter urged the budget office to speak more slowly so residents could follow the presentation.

The committee took no final action on new budget measures at this meeting; the item was continued for further consideration at the call of the chair.