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The state of California isn’t the only state scrambling to draft a budget while looking down. defect. Several Bay Area municipalities are also struggling with their own budget problems, chief among them San Francisco.

San Francisco’s 2022-23 budget and next year’s 2023-24 budget total approx. 14 billion dollars Each. On March 31, the San Francisco Comptroller’s Office released a budget. Update “The deficit for the upcoming fiscal year (2023-24) is projected to grow to $290.9 million,” he told Mayor London Breed and the San Francisco Board of Supervisors. The report also projects a total deficit of $779.8 million over the next two fiscal years and a deficit of $779.8 million in 2027-28. It predicts a deficit of $1.3 billion.

The reason for the growing deficit is the increase in the costs of city workers (salaries and benefits). Companies moving farther away or leaving the city will hurt San Francisco’s economy and reduce tax revenue; and undisciplined spending on programs to address San Francisco’s growing homelessness problem.

in the city Five-year financial plan Released in January of this year, the Office of the Comptroller stated, “In the development of wages and benefits [for city employees] It has increased significantly in recent years…[and is] Behind citywide operating expenses (which includes equipment and technology, utilities, real estate costs and more) the second largest cost driver for the worst deficit. Current salary and benefit costs across all city funds are over $6 billion a year.

Comparing the March revision to January’s original salary and benefit forecast, salary and benefit costs are expected to increase by a total of $768.5 million over five years. As pension investment performance continues to fall below expectations, San Francisco will bear an additional pension fund burden that will increase benefit costs.

But even as spending accelerates, conditions for law-abiding San Franciscans of all economic levels are deteriorating. For years, city leaders have ignored the residents who drive the city’s culture and economy and whose tax dollars pay city leaders’ salaries.

The decision by many San Francisco companies to shift to remote work or leave San Francisco entirely is having a ripple effect on the city’s budget. First, the regulator foresees an all-time high office vacancy rate of 33 percent in fiscal year 2025-26. Skyrocket Office vacancy Rates were only 4 percent in 2020; It has a great impact The city’s tax base, especially in Transfer of tax revenue. Because transfer taxes on real estate deals cover a disproportionately large portion of San Francisco’s revenue, the corporate sector in the downtown area adds to the city’s budget woes.

In addition, there were retailers to close Their San Francisco location cites crime, homelessness and drug abuse as threats to employee safety and deterring customers. These closures have a direct impact on employment and the city’s overall output. In an attempt to stop the bleeding, Mayor Brad proposed. Tax breaks For businesses relocating to San Francisco, however, the Board of Supervisors must approve these incentives.

San Francisco leaders owe it to their celebrities to admit that accelerating spending won’t fix their problems. While the budget is ballooning, crime, homelessness and dirty streets are driving people out of the city. Although San Francisco’s population decline has slowed since the outbreak, new data show that the population is still there. The lowest More than ten years.

The comptroller’s office further explains that San Francisco’s Department of Homelessness and Supportive Housing is “currently relying on concurrent state funds to operate multiple shelters.” Those funds will expire over the next few years, leaving the city on the hook and contributing $24 million to the city’s deficit if current shelter capacity continues.

This is a common mistake identified by public finance expert Mark Moses. The financial crisis of the municipality: Support programs with one-time income rather than “steady, reliable income” that can support the program long-term. While this is already a serious budget challenge, the city’s Department of Homelessness and Supportive Housing a 2023-2028 strategic plan Last month, he “outlined programs that would require more than $607 million in additional funding over a five-year period,” raising concerns about the city’s ability to effectively provide basic services to residents and businesses.

In her honor, Mayor Brad gave a call 5 to 8 percent budget reduction across all classes (in addition to the 5 percent discount she announced in December). However, this short-term belt tightening is far from a sufficient solution. A species-small education department budget cut does not necessarily result in a 5 to 8 percent budget cut and is not sustainable in the long term. Obligations that cannot be partially cut or reduced, such as debt service costs.

While Breed’s proposed budget cuts will encourage some deferred hiring and spending, San Francisco officials don’t want to take a step back and seriously reassess their priorities and long-term financial problems. Without tough choices, San Francisco will be closer to the $1.3 billion deficit projected by the San Francisco Controller in 2027-28. This is a 347 percent increase in the deficit from 2023-24.

The city’s corporate real estate collapse, worsening pension crisis, and sluggish growth of city programs will continue to drive the city into fiscal quicksand. Small budget cuts are not enough to solve these major financial problems, and they indicate that city officials do not understand the nature of the problem: misaligned priorities. They continue to spend huge sums of money to clean up the problems caused by their careless policies. Crime, EmptinessAnd Medicines.

San Francisco — once one of the most spectacular cities in California and the world — has been driven to the ground by city leaders who let these crises spiral out of control. They rode on high tax revenues and better economic times thanks to technological growth, but now that the tide is turning, San Francisco faces a financial bill.

The rest of America stands to learn a lot from the San Francisco scene. If its leaders don’t step up to make responsible decisions, San Francisco may not recover.

Sheridan Swanson is a research manager at the California Policy Center.