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Committee releases most of $43M reserve to departments and hears a $483M general-fund shortfall in three-year joint report
Summary
The Budget & Finance Committee approved releasing about $42.6 million of a midyear reserve to departments, leaving approximately $516,354 for emergency-management needs, and received a joint three-year projection that shows an estimated $483 million general-fund shortfall for the coming fiscal year with larger gaps in the next two years.
The Budget & Finance Committee voted to release most of a $43 million midyear reserve to city departments and then heard a joint three-year budget projection that preserves uncertainty about state and federal revenue.
Chair Supervisor John Avalos said the reserve had been set earlier in the year to protect the city nd county—udget while the board and mayor finalized a large restoration package. The budget analyst recommended releasing $42,601,750 and continuing to reserve $516,354 for the Department of Emergency Management; the committee agreed and the chair announced the reserve was released.
Budget Director Greg Wagner and the controller presented the joint report produced by the controller's office, the mayor's budget office and the budget analyst. "The projection for the coming fiscal year is that the city, given information we know today, is facing a $483,000,000 projected general fund shortfall," the controller said. The projection shows the shortfall rising in years two and three of the forecast (roughly $712 million then $787 million under current assumptions).
The joint report lists key assumptions and risks: a slow local economic recovery beginning in 2010, the use of one-time solutions in the current year that reduce starting balances, and an assumed additional $40 million state revenue loss above cuts already reflected. The report also highlights large volatility and uncertainty in property-transfer and property-tax revenues driven by appeals and market activity, and it calls out pension cost increases (about $52 million projected) and other salary and benefit pressures.
Officials flagged several possible partial offsets that remain uncertain: an extension of the federal Medicaid FMAP increase, a potential SB 188 hospital-fee mechanism that could bring roughly $30 million to the city's public hospital system, and planned labor concessions that could produce tens of millions in savings if negotiated. Staff said a series of planned labor actions and concessions could reduce the gap but that significant additional work remains to balance the coming-year budget.
The committee closed with a reminder that pending state and federal decisions and ongoing labor negotiations will shape the final balancing plan, and adjourned.
