Mayor's budget office warns of $229 million shortfall; asks departments for 8% cuts

Nani Coloretti, the mayor’s budget director, told the San Francisco Budget and Finance Committee that preliminary instructions for the FY2008-09 budget call for department reductions to address a projected $229,000,000 general-fund shortfall.

Coloretti said three primary factors drive the gap: the loss of one-time balancing sources (which she quantified at about $110 million), costs tied to memoranda of understanding and annualization of positions (with accompanying fringe costs; she cited a $22 million component) and mandated baseline spending increases. “So the total negative shortfall projection for next year…is $229,000,000,” she said.

The mayor’s office is operating under assumptions of roughly 5% growth in general-tax revenues and no meaningful increases in state or federal funding; Coloretti warned that revenue growth alone would not close the gap because of the city’s rainy-day trigger. She asked departments to identify current-year reductions, an 8% reduction in general-fund spending for the upcoming year and contingency reductions of 5%. Coloretti outlined key schedule dates — the governor’s budget release, capital request deadlines and the timing of the controller’s six-month, joint and nine-month reports — and the committee agreed to keep the hearing open and continue the item to the call of the chair pending state budget developments.

Monique Smuda of the controller’s office confirmed the schedule for six-month and nine-month reports and the joint report, which the mayor’s office uses in planning.