San Francisco has led the nation in our public health response to COVID-19, but the impact of the pandemic on our economy and our City’s budget has been significant, just as it has been for cities and counties across the nation.
As we plan our City’s upcoming two-year budget that goes into effect in July 2021, we have projected that we will need to close a deficit totaling $653 million. This comes after the $1.5 billion deficit we already closed last year. I’m really proud that in closing that previous deficit we were able to avoid laying off any City workers. But in many ways, we did so because we had strong reserves and we were able to make “easy” reductions — which left many hard choices that will be unavoidable in this upcoming budget cycle. This means that City departments have been asked to propose new reductions of up to 10% of their budgets, which would almost inevitably result in layoffs and painful service cuts.
But there is good news on the horizon.
It starts with the fact that President Biden and Vice President Harris won the White House, and Democrats took the Senate. This means we finally have a federal government that wants to invest in the success of states and cities instead of attacking us. This will play out in the coming months and years in so many incredible ways around advancing civil rights, fighting climate change, and providing support for our most vulnerable. But the immediate benefit from this election we are seeing play out is in the passage of the American Rescue Plan, which Congress is about to approve under the leadership of Speaker Nancy Pelosi.
The American Rescue Plan includes $1.9 trillion to immediately address the health, economic, and societal harms of the COVID-19 pandemic. The relief package includes funding for a national vaccination plan, provides immediate, direct support to families bearing the brunt of the COVID-19 crisis, helps governments maintain critical services and avoid layoffs, and provides key resources to struggling communities in the wake of the pandemic.
Most immediately for our City, the American Rescue Plan will provide roughly $600 million to San Francisco. In addition to this, the Federal Emergency Management Agency has announced they will fully reimburse eligible costs relating to the pandemic response, instead of only reimbursing 75% of those costs as they had been doing previously. Additionally, new projections show that we have an unexpected surplus in the current budget year of $125 million.
All of this is much-needed good news that will help us prevent many of the drastic cuts that would otherwise be on the table. It will also allow us to provide some immediate relief to our small businesses, our arts and culture organizations, and our residents who are really struggling. At the same time, just because we are receiving a one-time influx of stimulus money does not mean that our budget challenges are behind us. We need to keep planning for the challenges ahead. Our sales, business, and hotel taxes have taken major hits and will only begin to recover as our city and our overall economy emerges from this pandemic. We’re going to do everything we can to make that happen as soon as possible, but we know our recovery isn’t going to happen overnight.
So here is what I hope we can work with the Board of Supervisors to achieve:
- Prevent Layoffs & Cuts to Services
When I asked Departments to propose budget cuts, some of them included laying off workers and cutting basic City services. This included our police department, which had to propose possibly losing 167 police officers and 43 civilian Police Department employees. It included potential cuts to street cleaning as well as staffing in the 911 call center, which would inevitably result in longer response times for emergency calls.
And right now, in a time of incredible insecurity caused by this public health crisis, the proposed cuts also would include critical services like eviction protection programs, supportive housing services, and immigrant legal defense. These cuts could also gut our ability to make capital improvements like replacing our 911 dispatch system, paving our roads, and making critical repairs to City-owned facilities.
Laying off City workers would be devastating. Not only would the loss of these jobs hurt the workers who have been going above and beyond for the last year in response to the pandemic, it would also inevitably result in worse service for our residents and a negative hit to our economy.
If this federal stimulus can help us avoid these painful cuts, we have to do just that.
2. Provide Immediate Relief for those Impacted by the Pandemic
We know that even as we work to preserve services and prevent layoffs, we cannot lose sight of those in need of immediate relief. Small businesses have been closed or partially open for months. Workers have lost hours and wages. Artists and cultural organizations have been devastated by the loss in revenue and tourism. We have already provided relief for months, but we need to continue to do more.
The $125 million surplus for the current fiscal year can go towards many of these needs, and in fact we’ve introduced legislation to provide relief for small businesses and the arts that is pending at the Board of Supervisors. And as we move to consider this potential stimulus money, we have to keep our focus on supporting the very things that make San Francisco an incredible city to live in and visit.
3. Plan for the Future and Be Responsible with This Money
We should absolutely use this one-time funding to avoid cuts and layoffs this year and provide immediate, targeted relief, but that doesn’t mean we should spend it all at once. If we were to do that, we would simply be kicking the can down the road and we’ll find ourselves next year right back in the situation we’re in now.
We still face ongoing deficits in future years. We can’t predict what our economic recovery will look like and how much tax revenue will come in. But if we can maintain our existing reserves to use in future years, we can even out our budget deficits in the future and avoid layoffs and cuts. And if we have any question about how important our reserves are, we can just look back at the last year, when they helped us prevent layoffs and preserve services during one of our City’s most challenging times in its history.
I will do everything I can to meet these priorities responsibly, using the stimulus money we will be receiving. We have an opportunity here to avoid the outcomes we all feared and invest in the future of our city, while setting us on a sustainable path for years to come. Let’s make it happen.