Transcript National Problem

16th Annual Real Estate
Conference
The New Reality Of California Budgets
San Francisco Assessor-Recorder
Phil Ting
May 24, 2011
Two Things All Voters Agree On
 No
New Taxes
 Don't
Cut My Services
SF’s Budget Crisis Is Not Unique

National League of Cities report



Personnel Cuts - 79% of cities
Capital Projects - 69% of cities
San Francisco's 5-yr plan includes $433M in revenue growth

Still have $829M deficit in the 5th year (FY15-16)

SF must define program priorities instead of across the board
cuts

Need measurable outcomes to determine how much funding
required to achieve program objectives
SF's Projected
General Fund Budget Gap
900
$829
800
$746
700
$619
$ in Millions
600
500
$458
400
300
$283
200
100
0
FY11-12
FY12-13
FY13-14
FY14-15
FY15-16
$283M (FY11-12) to $829M (FY15-16)
How Did San Francisco Get Here?

Economic downturn reduced revenues




General Fund revenues down $139M (5%) from FY08-09 to
FY10-11
AAB appeals filed increased 570% over past two years
9% of SF’s parcels have a temporary (Prop 8) reduction
compared with 26% statewide
Increase demand for services

41% increase in food requests – 30% of demand unmet

61% increase in residents on food stamps over past 2 years

SF established call center to handle food stamp demand –
10,000 questions a month on that subject alone
How Did San Francisco Get Here?

Constraints on both Raising Revenue and Cutting
Expenses



Personnel costs continue to increase


2/3 vote to pass taxes
Wages and benefits governed by contract
25% of the $4.48B CCSF currently owes employees in
pensions is unfunded
City’s spending on pension costs has tripled in the
past decade

$125M to $357M
San Francisco Tightening Its Belt
 Sample

of Cuts Made in FY10-11
$20M in transportation, street, sewer and
sidewalk repair and maintenance

$15M in salaries from SF Sheriff

$7.5M in salaries from SFPD
San Francisco Needs $829M
 Need
$829M
What Can San Francisco Do Going
Forward?

Pensions: put retirement payouts on sound
financial footing




Managing health benefits costs




Raise retirement age for new employees
Increase contributions for all employees who earn over $50,000
Stop pension spiking; salary over 3 years
Improve employees’ health through preventative care
Increase cost sharing with employees and retirees
Each 5% decrease in health care costs will save $30 million
Saves $100M annually
San Francisco Needs $829M
$829M
 Need
 Reform
Pension and Health
$100M
What Can San Francisco Do?
Contain Costs - Active Employees

Wages & salaries projected to increase 32%
over next five years ($647 million total)

Existing wage concessions ($230 million over
two years) expire in FY11-12

Each 1% reduction in wage costs saves $12
million

Concessions save $115M annually
San Francisco Needs $829M
 Need
$829M
 Reform
$100M
$115M
Pension and Health
 Wage Concessions
What’s The Impact Of Drastic
Cuts?

Police


Fire


20% cut = $53M = close 8 of 42 firehouses
Public Health


20% cut = $80M = 960 police officers
20% general fund = $109M = less services for mental
health, HIV prevention, H1N1 inoculations
Total Savings = $242M


Not an option – no public support
Doesn't close 1st year gap!
San Francisco Needs $829M
 Need
$829M
 Reform
$100M
$115M
$242M
Pension and Health
 Wage Concessions
 20% Police, Fire, Health Cuts
Gap With Drastic Cuts
$372M
Additional Budget Tricks
 Restructure
 Limit
Debt/Delay Capital Spending
Inflation Allowances
 Miscellaneous
 Smoke
Dept Savings
and Mirrors
San Francisco Needs $829M
 Need
$829M
 Reform
$100M
$115M
$242M
$218M
Pension and Health
 Wage Concessions
 Budget Cuts
 Budget Tricks
Still Remaining
$154M
Show Me The Money!

$433M revenue growth from improved economy
already in 5-yr plan

New revenue needed in addition

Revenue increases require voter approval
(Prop 13 and 26)

Rate adjustments for permits, fees and other
revenues

Give cities local taxing autonomy
Property Taxes Contributed 36% ($985M)
Of FY09-10 General Fund Revenues
$158.5
$160
$150.9
$141.9
$140
$130.6
$120.4
$120
$112.1
$105.1
$94.4
Billions
$100
$80
$98.8
$87.9
$78.3
$60
$40
$20
$0
FY00-01
FY01-02
FY02-03
FY03-04
FY04-05
FY05-06
FY06-07
FY07-08
FY08-09
FY09-10
FY10-11
Transfer Tax Revenue $43M Over
Budget In FY10-11
$160
$140
$120
Millions
$100
$80
$60
$40
$20
$0
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
How Can San Francisco Deliver
$154M in New Revenue By FY15-16?
 Sales
Tax
 Hotel Tax
 Parcel Tax
 Payroll Tax
 Permit & Fees
 Local Autonomy
San Francisco Will Come Out Ahead

First ever 5-yr financial plan released
 San Francisco needs to raise revenue - avoid
one-time band aids
 City must define program priorities instead of
across the board cuts - structural reform
 Improve efficiency - use measurable
outcomes to determine funding required to
achieve the program objectives (SPUR)
That’s All Folks
2010-11 General Fund Uses
Transfers Out, 14%
General City
Responsibilities,
4%
Community Health,
18%
Administration &
Finance, 6%
Culture &
Recreation, 3%
Human Welfare &
Neighborhood Dev,
22%
Public Works,
Transportation &
Commerce, 1%



Salaries = 37%
Benefits = 14%
Non-Personnel Operating
Costs = 17%
Public Protection,
32%



Transfers Out = 14%
Aid Assistance = 10%
Grants = 5%