San Francisco Mayor Warns $840 Million Budget Shortfall Demands ‘Very Difficult Choices’
Mayor Daniel Lurie stated that the deficit might escalate to $1 billion in the third year.
Report
released by the city controller’s office on February 18, the city of San Francisco is facing an $840.2 million deficit in its upcoming two-year budget.
Mayor Daniel Lurie described the deficit as “historic,” warning that it could reach $1 billion in the third year.
“We cannot continue to spend beyond our means year after year,” Lurie stated in a message sent to The Epoch Times. “We must start taking steps to restore our fiscal integrity immediately.”
The report indicated that the current outlook carries substantial risks due to “economic uncertainty and potential policy changes that could impact federal revenue.”
The controller’s office anticipates a $35.7 million improvement in the general fund compared to the last forecast in the December 2024 Five-Year Financial Plan.
“San Francisco is experiencing growth in various sectors, but years of budget decisions prioritizing short-term solutions over long-term sustainability have rendered the city vulnerable, especially in light of uncertainties at the federal level,” Lurie remarked.
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Lurie emphasized the need for “a balanced budget that prioritizes essential city services.”
“If decisive action is not taken this year, the consequences for our city, including the ability to maintain clean and safe streets, our public health framework, and our economic stability, will be severely compromised,” Lurie explained. “This will necessitate some very difficult choices, but I am confident we can meet this challenge.”
According to the report, San Francisco anticipates receiving $452 million in federal funds.
However, some of these funds may be influenced by changes from the Trump administration regarding federal funding in relation to new immigration, LGBT, energy, and DEI policies, as mentioned in the report.
Despite two courts issuing temporary restraining orders, “the litigation and the risk to the City’s federal funding is still ongoing. For instance, the courts may lift the funding freeze partially or entirely,” the report warns.
lawsuit
filed on February 7 by San Francisco alongside other local governments across the nation challenged an executive order from President Donald Trump that
mandates federal officials to cut federal funding to sanctuary jurisdictions as permitted by law.
San Francisco has had sanctuary policies protecting undocumented immigrants from federal immigration enforcement since 1989.
According to the report, citywide revenues are projected to fall short of the budget by $169.9 million and are $119.7 million below prior forecasts.
“The discrepancies from prior forecasts are mainly due to deteriorating expectations for property, hotel, and sales taxes,” the report states.
San Francisco’s sales tax recovery had previously outperformed other Bay Area counties, but that trend has reversed in the last two quarters. Contributing factors cited in the report include “inflation, interest rates, consumer debt, online shopping, and a shift in spending toward nontaxable services,” all of which have led to storefront closures and a decline in high-end purchases.
Nonetheless, by the end of the year, departments are projected to have a net surplus of $97.7 million. The mayor’s hiring restrictions announced in January have played a role in contributing to this surplus, the report notes.
