SAN FRANCISCO IS going to lose some public services this year. That's just inevitable: Mayor Gavin Newsom isn't going to balance the budget, and close a deficit of more than $300 million, without making some real, painful cuts.

Those cuts aren't necessary: this is a rich city, and there are plenty of wealthy companies and individuals who have collectively saved billions of dollars from federal and state tax cuts over the past few years who could, and should, be asked to pay a whole lot more to the city.

But there's no point pretending that Newsom is going to raise local taxes by $300 million – or that he would put up the money and political capital to pass those tax hikes, which would have to go to the voters this fall. Still, the Board of Supervisors needs to make sure the final budget doesn't reflect a fundamental change in city priorities – and without major changes from the board, that could be exactly what happens.

The mayor is scheduled to release his budget just as we go to press, so we don't know exactly what it will look like. But plenty of hints have been leaking out, and some of the proposals aren't pretty. Newsom's first budget will not only set city spending patterns; it will also demonstrate his vision for local government – and early indications are that his vision includes two alarming elements: regressive economics and increased privatization.

The board should pronounce both of those approaches dead on arrival.

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Newsom told the San Francisco Chronicle May 28 that San Francisco can't afford the number of city employees it currently has and that the size of the workforce will have to be reduced. The unions are already demanding that managers be let go before low-income line workers and that the vacancies be created by attrition, not layoffs. But there's a larger issue here, one that may become the single most contentious element of the Newsom budget. The mayor appears to want to replace unionized city employees with private contractors, who, he will argue, can do city work at a lower cost.

That's a huge, dramatic step for San Francisco and a change in direction for a city that just last year effectively cut off a plan to allow Bechtel Corp. to take over much of the work that city employees should have been doing on the Hetch Hetchy water system rebuild. It would also put one of the nation's most progressive cities on the side of the Bush administration, which is trying to replace federal workers with private contractors at every level of government – even the military (see "Privatizing Torture," 5/26/04).

There are all sorts of endless problems with privatizing public services. For starters, it almost never works – when the final bills come in, the private companies often wind up charging more for the same level of service or cutting down the level of service to increase profits. And once you hand over public facilities and programs to the private sector, you never get them back. The Board of Supervisors needs to hold the line here: no more privatization.

The second potential problem is Newsom's tax plan. According to the Chron, he's talking about a tax package that will generate $50 million a year. That's way, way too small. Asking big business, which has been undertaxed for decades, to pick up just one-sixth of the budget burden is unconscionable – and that's being generous to Newsom. Because the way he's currently describing his plan, a fair amount of the new money would come from working people, in the form of a new sales tax.

We're not utterly opposed to raising the local sales tax, if the law is written to exempt basic necessities – and if it's just one small part of a tax plan that brings in at least $100 million a year, most of that from downtown and the rich. There are all sorts of tax proposals floating around right now, and the board should explore all of them, not just the ones Newsom puts forward.

Newsom is talking about restoring the gross receipts tax, which is fine, and closing the loophole that lets law firms and similar partnerships escape the payroll tax, which is also fine. But the board should also evaluate a commercial occupancy tax (an annual levy on office space), a utility-user impact fee (charging big commercial landlords and developers for the increased demands their buildings put on the city's water and sewer service), a hike in Pacific Gas and Electric Co.'s franchise fee, and an increase in the real estate transfer tax on property that sells for more than $1 million. We realize that some of these proposals could be unpopular and don't play well in the polls. And a tax package has to be crafted that can win voter approval in November. But these don't all have to be part of the same ballot measure; why not try more than one?