Solo budgeting

Pub date February 19, 2008
WriterSarah Phelan


Mayor Gavin Newsom is giving his department heads until Feb. 21 to draw up a list of services and positions to be reduced and eliminated, but Board of Supervisors president Aaron Peskin notes this isn’t how city government is supposed to work.

"Technically, things aren’t being cut," Peskin told the Guardian. "Instead, the mayor is signaling that he is refusing to spend the money that has been appropriated by the board in the budget that was voted on and signed last year."

Last summer the Board of Supervisors used the add-back process to appropriate funds the mayor hadn’t sought, thus funding services such as the Workers Compensation Clinic at San Francisco General Hospital and Buster’s Place, the city’s only 24-hour homeless shelter, until the end of fiscal year 2007–08.

But now these same services are being targeted midyear. The mayor announced last November, shortly after he was reelected, that the city faces a projected $229 million budget, so he was demanding an immediate hiring freeze and across-the-board cuts.

As mayoral spokesperson Nathan Ballard reportedly told the San Francisco Chronicle last fall, "Although he wants to trim the fat, the mayor made it abundantly clear he doesn’t want to see a reduction in people sweeping streets or police officers walking beats."

But while city department heads spent the past few months trying to tighten belts, the mayor apparently expanded his, according to budget analyst Harvey Rose’s Feb. 13 report, which details the monetary impact of changes to Newsom’s staff — changes the mayor first announced Jan. 4.

"Don’t think that the irony of the revelations that have been made over the past few weeks has been lost on anyone," Peskin told us, referring to how Newsom added two entirely new positions, increased the pay of senior staff and newly appointed department heads in the Mayor’s Office, and raided the budgets of other agencies to pay for it all.

According to Rose’s report, the budgetary impact of Newsom’s staff changes amounted to an increase of $553,716, with other city departments funding about $1.34 million in annual salaries and benefits for 10 positions assigned to the Mayor’s Office.

These include two newly created jobs — namely, the mayor’s climate change director, Wade Crowfoot, and the mayor’s homelessness policy director, Dariush Kayhan.

Peskin admits that the spending Rose identified is a relative drop in the bucket, compared to the city’s $229 million deficit. "Yes, it’s not enough to significantly close the gap or save a significant number of services, but it’s symbolic," Peskin said, noting that even as homeless shelters are being fingered for elimination, the Human Services Agency is paying $169,624 annually for the mayor’s new homelessness policy director.

"And when voters approved more money for Muni, the mayor used it to hire people to pound out messages about climate change, when the best way to reduce greenhouse gases is to get people out of their cars," Peskin said, referring to Newsom’s new climate change director, hired at an annual cost of $130,112, using the Municipal Transportation Authority’s Safety and Training funds.

"It’s very frustrating and unfortunate," Peskin said, further noting that the $401,392 to terminate Susan Leal without cause as general manager of the San Francisco Public Utilities Commission will come from the city’s water fees.

"This is indicative of the misplaced priorities of the mayor," said Peskin, who doesn’t deny that spending control is required in the face of a looming deficit but resents how the mayor has been trying to do it unilaterally and not in cooperation with the board.

"The budget, by design, is a two-way street," Peskin observed.

Sup. Chris Daly claimed the services being targeted for Newsom’s midyear elimination are "a who’s who of the board’s priorities…. These are human and health services that the mayor has proposed be cut multiple times."

Daly’s legislative aide, John Avalos, who is running for District 11 supervisor, notes that while Daly wanted $33 million for affordable housing, a onetime amount, the mayor took a budget surplus and used it for multiple years, with the police, firefighters’, and nurses’ contracts accounting for his biggest expenditures.

Asked why the city’s deficit has ballooned by $144 million — from the $85.3 million the Controller and Budget Analyst’s offices identified in March 2007 to the $229 million that Newsom’s administration was suddenly projecting last fall — Tom DiSanto, budget and revenue manager for the Controller’s Office, cites an extra $82 million in salaries and benefits.

These include the four-year contracts that nurses and police and fire departments secured last summer, along with five extra police academies, said DiSanto, who also listed $7 million in police crime laboratory debt service, $7.4 million for sheriff inmate housing (required by last year’s Supreme Court order that prisoners can’t sleep on floors), and the $29 million transit set-aside that voters approved last November when they passed Proposition A.

But as DiSanto explains, the city’s budget problem is due not to lack of revenue but to baseline funding and rainy-day reserve requirements, not to mention the political process.

"Right now, with baselines and reserves, 96¢ out of every dollar goes into set-asides, and we’re required to adopt a balanced budget," DiSanto said. "That’s where the cuts come in. If we could access all the city’s revenues, we wouldn’t have a $229 million projected deficit," he added, noting that revenues are up, property taxes are higher than budgeted, and the hotel tax continues to be strong.

Ken Bruce, senior manager at the Budget Analyst’s Office, notes that unlike the federal government, the city of San Francisco has to balance the budget. He also says the current deficit projection comes from the Controller’s and the Mayor’s offices, not the Budget Analyst’s Office.

"In mid-March we get to do a joint forecast," Bruce told the Guardian. "It may paint a better picture, less of a doomsday scenario, but it still leaves us facing difficult policy choices. [The deficit] won’t drop from $230 million to $100 million."

Peskin envisions several long-term solutions, hopefully including positive changes in the White House this fall.

"With every passing year, as the federal government has abandoned the cities, we’ve taken more of a burden, and labor and capital costs have increased," says Peskin, who is mulling changes to the real estate transfer tax and closing a loophole whereby lawyers and accountants in limited liability partnerships have escaped paying payroll taxes.

That said, Peskin sees no easy fixes in the city’s upcoming budget hearings:

"It’s a fluid situation, and it’s all bad."