San Francisco Mayor Gavin Newsom this week proposed a fiscal 2009-10 budget that closes a projected $438.1 million general fund budget gap with job cuts, fee increases, department consolidations, privatization of some services, spending of reserves and wage concessions from city workers.

Newsom, a Democrat who is running to succeed Arnold Schwarzenegger as governor, did not propose any of the general tax increases pushed by members of the Board of Supervisors.

General fund spending would decrease $189 million, or 6.2%, to $2.86 billion. The all-funds budget, which includes enterprise funds and most of the city’s capital spending, would grow $69.3 million, or 1.1%, to $6.6 billion, thanks to big increases in capital spending financed by bonds and by federal stimulus dollars.

“It’s not perfect, but it’s as close to perfect, under the circumstances, as I can make it,” Newsom said as he introduced the spending plan to the board and the press Monday.

He acknowledged that the Board of Supervisors was sure to oppose and reverse some of the cuts he’s proposed, but he said his budget didn’t rip out the heart of the city’s social safety net, as some had predicted as news of mounting deficits began to come out of City Hall in recent months.

Newsom expects to face a battle as he pushes his budget through the Board of Supervisors in the coming weeks. Local political power is divided between moderate Democrats, represented by Newsom, and a coalition of progressives that includes more liberal Democrats and a member of the Green Party. The progressives control the Board of Supervisors and have vowed to fight cuts in social spending and privatizing city services.

San Francisco is California’s fourth-largest city, but its general fund budget is the second-biggest in the state after Los Angeles. San Francisco’s spending is higher than most cities because it is a combined city and county government, and California counties provide many social services on behalf of the state. The city’s relatively wealthy and liberal electorate has also consistently agreed to tax and fee increases to pay for more public services.

Newsom proposed cutting Human Service Agency spending by $15.9 million, or 2%, to $666.3 million. The agency provides social services to the homeless and the poor. Under the mayor’s proposal, the agency’s payroll would shrink by 237 workers.

The mayor proposed cutting the Department of Public Health’s operating budget by $128.4 million, or 8%, to $1.45 billion. San Francisco runs an acute care hospital, a nursing home and a universal health are program called Healthy San Francisco for the uninsured. Under the mayor’s budget, the department’s payroll would be cut by 400 workers.

While Newsom acknowledged that some of the cuts would be restored by the board, he also warned that social service spending is likely to come under increased pressure as the state addresses its $24.3 billion budget gap over the next month. He said preliminary estimates of the cut to the budget, which don’t include all of the proposed state cuts, show another $172 million of state funding cuts that San Francisco will have to absorb.

Newsom’s budget relies on spending $79.3 million of reserves, including $24.6 million of the city’s rainy-day fund that will be given to the San Francisco Unified School District.

The city is cutting spending because tax revenues have tumbled in recent months. The city expects regular general fund revenue, including taxes, fees and intergovernmental aid to fall 5.1% next year. Sales tax revenues are expected to fall 18%, while hotel occupancy taxes fall 38% and property transfer taxes decline 52%. Property taxes, the city’s biggest tax revenue, will rise 3.8%, helping to soften the decline in the more cyclical tax revenues.

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