San Francisco faces $3 billion deficit over next 4 years, but still gives raises

(The Center Square) - The city of San Francisco is projecting a cumulative $3 billion deficit in its general fund from 2024-25 through 2027-28.

The city agreed to raises in union contracts shortly after those projections that resulted in salary and benefits costs that were greater that those used to project the deficits.

Mayor London Breed’s proposed budget for 2024-25 and 2025-26 was included in the June 21 agenda for the city’s Budget and Appropriations Committee. The final budget will be voted on Aug. 1.

The city’s top budget analysts from three different departments came up with the budget projections in March that show a $244.7 million deficit in 2024-25, a $554.5 million deficit the following year. The deficit increases to $927 million in 2026-27 and jumps to $1.37 billion in 2027-28.

The Mayor’s budget was able to close the $789.3 million shortfall in 2024-25 and 2025-26 by, in part, increasing fees across departments that charge for services and using reserves that had built up in other departments.

“Even with these reductions, funding swaps, and the use of reserves, the City’s projected structural deficit remains significant,” the Mayor’s budget proposal stated. “Future budgets will need to continue making reductions or identify new revenue sources to address these deficits.”

The city has about 30,000 employees that work for more than 30 unions. The city said all of its recent contract negotiations provide a wage increase of at least 13% over three years. That amounts to more than $100 million in additional costs. The union contracts include a guarantee that every city employee will make no less than $25 per hour.

The Mayor's office didn't respond to an email seeking comment.