San Francisco’s Controller estimates that the city faces a $300 million deficit for the coming budget year. Here’s what that means: If the city continues to do business-as-usual, we will need $300 million more than we will actually have. Underlying all of “the sky is falling” projections is the presumption that “business as usual” is a good thing. It’s not.
The Stalemate – Last week, Supervisor Fiona Ma’s well-intentioned Revenue Advisory Panel concluded its work in a stalemate and without the hoped-for consensus recommendations about revenue measures that should be placed on the November, 2004, ballot. No surprise. The self-described fiscal conservatives on the task force (Committee on Jobs, SF Association of Realtors, Hotel Council, Apartment Association, etc) repeated their mantra until the end: “We can’t support any new revenue while the city has failed to make reasonable cuts in excessive spending.” They point to the much higher than average per capita spending on some key city functions. The service providers (unions, non-profits, etc.) maintained that budget cuts actually began two years ago and are well underway for the current year; that funds in some important areas are already inadequate to meet demand and need; and that sharing the pain means the wealthiest among us must put more in the pot.
An increasing number of those of us who call ourselves “progressives” are realizing that both sides are right. In San Francisco at least, there is not much disagreement about what it takes to make a great city – excellent schools, efficient public transit, affordable housing, up-to-date libraries, adequate public health services, well-maintained parks and other public spaces — for the diverse population we all say we want to keep. There is also considerable agreement that the funds being spent to provide many of the basic elements of a great city itemized above are woefully inadequate.
Consider the Recreation and Parks Department: If the proposed budget cuts go through (and we have every reason to believe they will) the General Fund support for the department will have declined by 40% in just three years. Fees for almost every function of the department have increased; park maintenance has deteriorated – bathrooms are closed and fields are unsafe; the administrative capacity of the department has been compromised; and recreation programs have been reduced.
The City is now seriously considering such distasteful options as naming rights for Candlestick, privatizing the Randall Museum, having an official name brand beverage sold on public property, placing parking meters in Golden Gate Park, eliminating the youth job training program, further reducing hours of operation of recreation centers, cutting way back on park clean-up, and once again postponing the purchase of much needed public land. All this when we should be spending more, not less, on our entire recreation and park system – so that it can provide the safe and clean “back yards” our children deserve, the hubs of activity that can revitalize our neighborhoods and prevent violence, and be the vigilant caretaker of parks and fast-disappearing open space.
What would it take to fulfill this vision of the Recreation and Park Department? Maybe another $30 million a year – a rather modest amount in light of the importance of the impact on our quality of life and the overall economy of the city.
Superficial Remedies So Far: – Most recommendations to cut the budget are prefaced by an elected official saying, “Under ideal circumstances, we would be adding money – not taking it away, but..” Yet the actions of politicians demonstrate that shaking up the status quo is often too threatening. Too many elected officials would rather make cuts in departments they perceive as weak than face the wrath of powerful interest groups. So instead of addressing underlying problems, they often avoid solutions that would adequately fund the public’s priorities in the long run:
. They start with one-time budget fixes. That has been going on for several years now – not filling positions, selling surplus land, deferring maintenance, negotiating “loans” from city employees, etc. These remedies come back to bite us as years go on.
. They move on to “smoke and mirrors.” Cutting police and fire overtime is a favorite. Excessive overtime is cut in the official budget to make sure elected officials look responsible and even-handed; but it is done with a wink, because everyone knows that within several months the departments will request a supplemental appropriation – and it will be given. Consider the first six months of this fiscal year, the Fire Department had
already exceeded its budget by $3.4 million, while the Department of Human Services had already saved the city $14 million
. Then there are across-the-board cuts, a strategy which has been implemented this year and in many past years. This approach obviates the need to differentiate between low and high priority items, or low and high efficiency expenditures. Every department is given the same marching orders. This year, the required cut is 5%, with a 15% contingency. Did it happen? That’s not what we hear. Some departments, like Department of Human Services and Recreation and Park, played by the rules. But what did the SF Fire Department do? It submitted a budget that was actually $3 million HIGHER than last year’s budget – with no plan in sight for anything approaching a 5% cut, much less the 15% contingency submitted by others.
The good news:
. There is lots of money in the city budget that can be cut without compromising public safety, the community’s quality of life, or the fair treatment of city employees.
Take, for instance, the Fire Department. (I have been asked why I am so focused on the Fire Department. It’s the same reason that Willie Sutton robbed banks – it’s where the money is. That is, the most money that could be cut without jeopardizing services to the public.) Since the 1907 earthquake, the SFFD has become the most sacred of the sacred cows in the budget. This sad state of affairs, according to thoughtful observers both inside and outside the department, has fostered a culture of entitlement that has lasted for decades. In fact, many believe that a more efficient deployment of resources (while saving money) would actually enhance the SFFD’s public safety responsibilities.
Several years ago, the city spent several million dollars to have the Budget Analyst evaluate the Fire Department. Most recommendations have yet to be implemented. In fact, last year the Budget Analyst’s recommendation to reduce 13 $190,000 Battalion Chief positions and save $2.5 million was actually approved in the Budget Committee. But last minute threatening antics from the firefighters union led to a midnight reversal-losing the opportunity to save money and requiring additional cuts elsewhere. This year the City Controller will be producing a report detailing millions in potential savings by identifying the reduction in fire suppression needs and the importance of cross-utilization of medical and fire personnel. This year, we have one more chance to make sensible reallocations that could save millions without compromising essential services.
The other good news:
. There is still a lot of money in the city that can be taped to meet public needs. SF is still a corporate headquarters, and corporations in America are paying a much smaller share of taxes than they were 20 years ago, and have benefited enormously from the Bush administration’s policies. Furthermore, in California, Proposition 13 means that many businesses pay minimal property taxes to the city. No one wants to discourage local economic development. But there are things that can be done that are both fair and won’t jeopardize our economy. We can initiate a Commercial Occupancy Tax, similar to one in LA – a tax which targets the businesses that have benefited the most from Proposition 13 since the charge is based on square footage of property owned. This would yield $40 million a year according to the Controller.
We can close the major business loophole which was created several years ago when the city eliminated the gross receipts tax because of a lawsuit filed by our largest businesses, and which allows law firms to not pay taxes. Ending this “partnership compensation” loophole would generate $13 million. And we can make our real property transfer tax the same as Berkeley’s and Oakland’s, generating $35 million in the coming year and $79 million in the following year. If we also re-instate the vehicle license fee at the local level (per legislation by Assemblyman Leno), by the year 2005-06, San Francisco would have $180 million more local dollars for the important functions of city government.
The Bad News: Finding the political will to do what needs to be done will not be easy. But the budget crisis may force the hand of even the most reluctant policymakers. If we handle this crisis correctly and both reallocate funds wisely (that means appropriate budget cuts) as well as campaign to raise reasonable revenues, we will not only avoid disaster, but when good times return, we will have the additional resources needed for improving the quality of life in our beautiful city.
Coming next in this column:
. Results of a comprehensive David Binder Poll on the priorities of San Franciscans. They may surprise you – and they will certainly surprise our elected officials.
. Details of millions in SFFD budget cuts that would make the department more efficient, more accountable, and more consistent with standards set by other city departments and other cities – and, most importantly, would allow SF to meet other vital needs with the money saved.
