Controller projects modest surplus but flags $30M of uncertain revenues and possible childcare impacts

The Controller's Office presented the city’s first‑quarter fiscal update on Oct. 19, reporting a projected general fund surplus of $21.5 million for the current fiscal year — contingent on receipt of about $30 million in uncertain revenues.

Leo Levinson, director of the budget and analysis division, said the projection assumes $30 million in federal and other revenues materialize; the recently signed state budget reduces local general fund revenue by an estimated $7 million, a reduction he said was accounted for within the city’s $30 million allowance. Under the assumptions, the city would end the year with about $25 million in the general reserve and $33 million in the rainy‑day reserve.

Levinson highlighted risks: the pace of economic recovery (sales and hotel tax, payroll), pending outcomes on major commercial property tax appeals, and uncertainty around state programs (hospital fee retroactivity, mental health state plan amendment). He reported known department shortfalls (e.g., San Francisco General Hospital fee program) and other areas that remain uncertain.

Supervisors and mayoral staff focused on a state cut to Stage 3 childcare (estimated local impact ~$13M affecting roughly 1,200 children). Kate Howard of the mayor’s office said the legislature is negotiating potential backfill arrangements (including First 5 and other mechanisms) that could be retroactive to Nov. 1; city staff are exploring short‑term approaches to avoid immediate disruptions to families.

The presentation closed with discussion of structural challenges; the mayor’s office gave a preliminary estimate of the FY 2011–12 budget shortfall around $450 million, and staff said more refined figures will be provided with budget instructions in November or December.