Mayor Lurie warns of $1 billion structural deficit, defends proposed cuts to city workforce

Mayor Daniel Lurie told the San Francisco Board of Supervisors on April 14 that his office will finalize a proposed budget in the coming weeks and that difficult choices remain necessary to close a projected five-year structural gap.

"This city has to stop spending more money than we have," Lurie said in his opening remarks, adding that prior work reduced the long-term structural deficit by roughly $300,000,000 but that federal and state funding cuts could push the deficit to $1,000,000,000 in coming years if no action is taken. He cited potential impacts from federal proposals, saying "the impacts of HR 1 alone may exceed $300,000,000 annually, and could force tens of thousands of San Franciscans off of Medi-Cal and SNAP." Lurie also warned that a proposed federal budget could eliminate Continuum of Care homelessness funding that currently serves more than 2,200 households citywide.

Supervisor Chen (District 11) pressed the mayor about the administration's plan to pursue roughly $100,000,000 in cuts to city workers, noting recent revenue developments including a reported $120,000,000 settlement with Airbnb and an anticipated up-to-$300 million in new Part D revenue. "Given this improved fiscal outlook and the potential for up to 300 millions in new revenue from Part D, why are you still pursuing a 100,000,000 in cuts to city workers?" Chen asked.

Lurie replied that the recovery remains fragile and that the city faces a choice between acting now or being forced to do twice as much later. He said the one-time settlement referred to by Chen will be spread over three years "so we don't create a fiscal cliff by spending it all at once," and that the administration aims to protect core services while closing the structural gap.

Lurie characterized the decisions as "incredibly painful" and emphasized the goal of setting the city on a stronger footing for a broad-based recovery. He said he looks forward to working with the board and the budget committee to deliver a responsible package that "protects the essentials and puts this city on stronger footing for the coming years." The mayor's office will submit the formal budget package to the board for consideration in the weeks ahead.

What happens next: the mayor said his office will finalize the proposed budget and prepare the formal package for the Board of Supervisors' consideration in the coming weeks; the board may review the proposal and consider adjustments, hearings and amendments during its budget process.