COVID-19 to cause San Francisco budget shortfall of over $1B, city report estimates

San Francisco City Hall

A new report released Tuesday by San Francisco city leaders projected the city's budget deficit for the upcoming two-year budget could increase to more than $1 billion as a result of the novel coronavirus.

According to the report, when combined with the city's prior deficit of $420 million from earlier this year, the deficit could increase to between $1.1 to $1.7 billion by fiscal year 2021-2022. The shortfall is primarily driven by losses in hotel and transfer taxes.

"The coronavirus pandemic is an immediate threat to our public health and we're doing everything we can to slow its spread and save lives, but we know that it is also having a major impact on our economy and our city's revenue," Mayor London Breed said in a statement.

"The economic impact that is already hurting our residents and businesses is also going to require difficult decisions by the city moving forward," she said. "Over the coming weeks and months we will be focused on supporting our residents who have their jobs or their business, while continuing to advocate for more state and federal support. We all need to work together to and make the hard choices to get through this and to get San Francisco back on the road to recovery."

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The report's budget deficit projections did not take into account expenses related to the city's response to the public health emergency, nor did it take into account state and federal revenues to offset costs related to the public health crisis. A more detailed update on those projections will be released in April, Breed's office said.

The report was issued by the Mayor's Budget Office, City Controller Ben Rosenfield and Board of Supervisors Budget and Legislative Analyst Severin Campbell.

Additionally, Breed announced the city's budget timeline will be delayed for two months to allow the city to focus on the public health emergency, and for budget staff to develop a plan to bring the budget's current costs in alignment with lower project revenues and prepare for the upcoming budget cycle.

Under the new timeline, Breed will introduce a balanced interim budget to the Board of Supervisors by June 1, and then introduce a full two-year balanced budget for fiscal years 2020-2021 and 2021-2022 to supervisors by Aug. 1. If supervisors approve it, the mayor's office expects the budget could be signed by Breed as early as Oct. 1.

To further support city employees during the emergency, Breed announced she has enacted a number of expanded benefit and leave provisions for city employees, including allowing income and paid leave through May 1.

She also enacted providing employees with an additional 80 hours of paid sick leave; implementing the Emergency Paid Sick Leave provision under the federal Families First Coronavirus Response Act; increasing compensatory time off for extra work performed by employees during the emergency, as well as waiving limits on vacation and compensatory time off accrued; allowing essential employees required to work to earn additional floating holidays; and establishing a city paid administrative leave program for any essential employee required to come to work in the case they contract COVID-19 or have confirmed COVID-19 symptoms.

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