Is SF spending too much money?

Pub date January 5, 2010
SectionPolitics Blog

By Tim Redmond

When the SF Weekly ran its cover story a couple of weeks ago calling San Francisco “the worst-run big city in the U.S.” my first thought was to ignore it. That kind of claim is meaningless; it’s just a flashy headline, and the story didn’t back it up with much more than a few examples of bad management of the sort that occur in cities all over.

So what makes San Francisco “the worst?” Well, part of it, said the Weekly, is the fact that SF spends more money per capita than any comparable city and county. In fact, according to a chart the Weekly included in its story, SF spends more than twice as much per capita as Philadelphia (which is actually a comparable city, with big-city problems and a fairly rich service mix) and spends more than four times as much as Indianapolis (which isn’t comparable for a lot of reasons).

But the minute I started paying attention to that chart, I knew there was something really wrong. Melanie Ruiz and I spent some time checking it out, and we found that the “comparisons” are somewhere between misleading and totally bogus.

Here’s what we found.

What’s important here is that it’s really hard to compare any two cities in America on this level. Cities are organized in so many different ways, and their budgets are set up so differently, that any direct comparison is going to look like apples to oranges.

For example, Philadelphia and San Francisco both have extensive, costly public transportation systems. Taxpayers in both cities underwrite those systems. But in Philly, the system, known as the Southeast Pennsylvania Transit Authority, is a distinct agency (like BART is out here); the city and county of Philadelphia contributes $63 million a year to its operations, but the major overhead costs are outside of the city budget.

There’s an airport in Philly, too. It’s expensive to run, just as SFO is expensive to run. It mostly pays for itself through landing fees, just as SFO does. In San Francisco, the cost of the airport (which takes no taxpayer money) is included in the city budget; in Philly, it’s not.

People in Philly who get sick and have no insurance don’t die in the streets – but that city and county doesn’t fund a public hospital the way SF does.

In fact, San Francisco’s budget includes just about everything that any city offers. It’s not that this city provides services nobody else does (well, we do, but that doesn’t explain the budget differences entirely). It’s that other cities and counties don’t include those services in their budgets.

Now, the folks at the Weekly, who criticized our story before it was even out, argue that

Yes, our city pays for things others don’t — but, then, other cities have to maintain aging infrastructure weakened by extreme heat and cold. Other cities have to keep up municipal vehicles ravaged by salt. Other cities have to shovel snow. Other cities have miles and miles more pothole-filled streets to look after. Other cities’ Sheriff’s Departments have many more responsibilities than San Francisco’s. Other cities have police forces larger than several European nations’ standing armies and security costs that dwarf this city’s.

All of which is true – and makes the point that you can’t do exact comparisons without doing a whole lot more work than the Weekly did on its chart.

But most of those items are million-dollar items – shoveling snow costs Denver, for example, millions a year – but not hundreds of millions or billions. Same for filling potholes. (Most cities don’t have Sheriff’s Departments, by the way – that’s a county function – and the county sheriffs who do more work are policing unincorporated areas. And the only city with that massive police force is New York, which is so unusual that it’s hard to compare it to any other American city.)

But the bottom line is, those are (comparatively) small-ticket items. The items that make a city budget seem huge are the departments and programs that run in the multiple hundreds of millions of dollars, and those tend to be things like public hospitals, transit systems, and airports. In SF, they account for more than $2 billion a year – and because of the way this city is set up, all of that goes in the same $6.5 billion budget.

We tried several ways to make a better comparison, which you can see here (pdf)

We compared general funds to general funds (something the Weekly got wrong). We deflated the SF budget by taking out those big-ticket items that other cities don’t include in their budgets. We tried to find cities more comparable to SF – big cities with big-city problems and services – and we tried to adjust those budgets to account for the fact that some of those cities get extensive services that are paid out of separate county budgets.

And we did something else: We took into account the cost of living. The vast majority of what the city budget (here and elsewhere) goes for is salaries of city workers. It costs a lot more to live here, so we pay our workers better. There are plenty of academic studies that look at comparable costs of living in cities; we used a generally accepted one.

And when we were done with all of this we came to the conclusion that SF doesn’t spend more than comparable cities; it’s really about the same.

Now that’s probably unfair to San Francisco (and Los Angeles). We’re in California, where the state doesn’t spend as much per capita on programs that aid cities as other states do. Yes, the state has a budget of more than $100 million dollars, but 40 percent of that goes for education – and in many other states, local property taxes pay for much of the cost of public schools. In California, thanks to Prop. 13, local property taxes are inadequate to provide decent public schools, so the state has taken up the burden.

When you take that factor out of the state budget, and compare California to other states, the per-capita spending is pretty low.

Our comparisons aren’t perfect. There are other cities to look at, other line items to examine, other methods of comparing that are also valid. The folks who read this blog (and the folks at the Weekly) will no doubt argue with our methods, and I bet somewhere in there we made some mistakes. But overall, I think our approach is more accurate.

People who live in cities typically pay taxes to several levels of government – the feds, the state, special districts (like BART), school districts (except in California), counties and the cities themselves. I would argue that San Franciscans probably pay less per capita than the residents of many other cities (certainly less as a percentage of their income). We just pay it all into one big pot.

That’s why the SF Weekly chart was so misleading. And why this kind of argument shouldn’t be used to say that San Francisco spends too much money on government.

I’m not going to argue that local government is perfect, or that it’s free or corruption and waste. There’s a lot of waste in San Francisco (does the mayor really need five press aides?) and plenty of inefficient spending.

But overall, it’s not a whole lot worse than other cities. That’s my conclusion.