An L-Shaped Recovery

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Economic advisers are predicting an L-shaped recovery for San Francisco, and it’s going to involve 25 percent cuts to some city departments, on top of the 730 layoff notices that were sent out between July 2008 and May '09.

“Staggering” is how Mayor Gavin Newsom described the $746 million deficit that the Mayor’s Office, the Controller and the Budget Analyst are projecting for FY 2011-12.

That number is in a ‘three-year budget projection” report that the Board’s budget committee hears tomorrow.

Controller Ben Rosenfield noted that the report “makes no assumptions about how budgets are going to be solved.”

But, of course, as Newsom pointed out, action will be taken, not just to address FY 2011-12’s $746 million projected deficit, but the $615 million deficit projected for FY 2010-11, and the $438 million deficit projected for FY 2009-10.

And those actions will be the subject of intense debate about priorities and solutions in the weeks to come.

Newsom’s proposed solutions for the upcoming fiscal year, include 12.5 percent budget cuts, plus 12.5 percent contingencies cuts, in some departments.

“I will not be accepting 25 percent cuts from some departments, but from others I will,” Newsom said. “I don’t believe in across-the-board cuts.”

Asked which departments he would accept 25 percent cuts from, Newsom told reporters, “You’ll find out when you read my budget.”

“We hope to have clarity in two weeks, by mid-April,” Newsom added, noting that the state had cut out more from the city’s budget than he had hoped.

“I was hopeful, internally, that they wouldn’t,” Newsom continued. “But it’s a little bit of a game. It means less will be cut next year.”

But while Newsom stated that he supports including revenue-generating solutions on the November ballot, he noted that taxes aren’t the only answer, and that fees and fines are another alternative.

“More fees, more fines, God forbid. They are already too high,” Newsom quipped, shortly before one participant at today's media roundtable, where Newsom presented this report, complained about fees at the Botanical Gardens.

Newsom also indicated that he is not convinced that eliminating set-asides is a meaningful solution.

“Do people want less investment in libraries, children’s services, public safety?” Newsom asked. “Will that really save you money? It will give you more liberty to move the money around.”

And he acknowledged that the City is currently negotiating with the unions to secure concessions on scheduled raises, rather than lay off more workers.

“They are negotiating for their brothers and sisters, their jobs,” Newsom said of the unions. “That’s not a guarantee that there will be no other lay offs, but a lot less.”

The joint report projects that the national recession will continue through late 2009 or early 2010, followed by a prolonged recovery period before reaching pre-recession levels of economic activity.

“San Francisco entered the recession later than the nation, and is projected to recover later as well,” it states.