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Controller warns of $127M revenue shortfall; mayor's office outlines potential $112M state impact
Summary
Deputy Controller Monique Smuda reported a projected current-year general fund shortfall of roughly $126.9M and a year-end balance of $20.1M after midyear cuts and reserve draws; Mayor's budget director Nani Coloretti briefed the committee on a proposed state package that could add roughly $112M of impact to San Francisco depending on triggers and federal stimulus outcomes.
The Budget & Finance Committee received the Controller's six-month report and a state-budget briefing that together painted a sharply constrained fiscal picture for the city.
Monique Smuda, deputy controller, said the office now estimates a current-year revenue shortfall of about $126,900,000 driven by declines in property transfer tax, sales tax, hotel tax and other discretionary revenues. After projected expenditure savings, reserve withdrawals and other offsets, the controller projects a $20.1 million general fund ending balance for the year. Smuda emphasized the continuing uncertainty caused by volatile markets and the unresolved state budget.
Smuda outlined the composition of the shortfall: property transfer tax down an estimated $49.5 million for the year, sales-tax-related shortfalls and a $37 million expected decline affecting health and welfare baseline funding, and a $39.8 million projected shortfall in hotel tax tied to a weak second quarter. She said departmental midyear cuts and reserve actions (including a rainy day draw and a budget savings incentive use) help close the gap so the current year will be balanced at the projected $20.1 million level.
Nani Coloretti, the mayor's budget director, briefed the committee on Sacramento negotiations: the state's framework under discussion at the time combined reductions, taxes and borrowing and included triggers tied to expected federal stimulus dollars and a possible constitutional spending cap. Coloretti presented a working estimate of the potential San Francisco share of the state package at about $112 million, noting the figure could change materially if federal funds arrive or elements are restored.
Supervisors asked about the possibility of state "IOUs" or delayed payments and whether the city might join litigation; the controller's office reported delays of roughly $9—2 million per month in some human services payments and said the city has sufficient cash on hand for now. The committee also discussed whether the city had joined litigation to challenge state payment deferrals; staff said the city attorney had joined other counties in a lawsuit and that the Board should receive a closed-session briefing on litigation status and process.
Public commenters urged the Board to protect safety-net programs and criticized the prospect of cuts that fall disproportionately on low-income residents, seniors and people with disabilities.
The committee continued the budget-update discussion and asked staff to prepare joint three-year projections and provide additional briefings on state actions and any litigation status.
Next steps: the controller, mayor's budget office and budget analyst will prepare a joint three-year projection in late March; staff will brief the Board about the city's litigation posture if requested.
