San Francisco’s budget deficit will swell to $746 million by 2011-2012, absent spending cuts or revenue increases, according to three-year projections published by the city’s controller, the mayor’s budget director, and the Board of Supervisors’ budget analyst in a joint report.
California’s fourth-most populous city faces budget gaps of $438 million in the upcoming budget year and $615 million in 2010-2011, the report said.
Mayor Gavin Newsom and the Board of Supervisors are debating ways to cut costs and increase revenue to fill the hole in next year’s $3.9 billion general fund budget. The deficit projections assume a continuation of current services and no new taxes.
But Newsom is required by the city charter to present a balanced budget to the board by June. He’s already asked all department heads to outline options for 25% budget cuts, while the supervisors are discussing a variety of tax and fee increases. Newsom is also pressing the city’s labor unions to renegotiate contracts that were agreed to before the economic downturn to reduce costs by up to $90 million.
The city needs to reduce spending because revenues are projected to fall 7.7% to $3.4 billion in the fiscal year that begins July 1 from $3.7 billion this year. Revenues are forecast to remain depressed in 2010-2011 and then expected to begin to grow slowly in 2011-2012.
“San Francisco entered the recession later than the nation and is projected to recover later as well,” the report said.
San Francisco’s general obligation bonds are rated AA-minus by Fitch Ratings, Aa2 by Moody’s Investors Service, and AA by Standard & Poor’s.