Budget deal leaves progressives uneasy as more bad news looms
As the Board of Supervisors prepared to give final approval to the city budget July 21, Sup. John Avalos, who chairs the board's Budget and Finance Committee, told his colleagues the budget deal that he and President David Chiu negotiated with Mayor Gavin Newsom is "ushering in a new spirit of cooperation and collaboration at City Hall."
But at the end of the day, frantic last-minute revisions and indignant criticism from Avalos's progressive colleagues felt more like a family feud than the culmination of a team effort. Avalos and Chiu were able to restore $44 million of Newsom's proposed cuts and got the mayor to promise to fund progressive priorities, such as public health and social services. Progressive supervisors, however, voiced deep skepticism about whether Newsom can be trusted.
To make matters more complicated, the messy conclusion of San Francisco's budget process coincided with the news that Sacramento officials had finally struck a state budget deal that proposes borrowing more than $4 billion from local government coffers. So the city's spending plan, balanced with no small amount of pain, may already be thrown out of balance.
Compounding that problem, it's looking increasingly unlikely that San Francisco voters will have an opportunity to weigh in on new tax measures that could help soften the blow of rapidly declining city revenues this fall, a situation that could quickly test this "new spirit of cooperation."
The tension at the July 21 meeting stemmed from Newsom's decision last year to close a massive cash shortage by making midyear cuts aimed at the heart of the progressive agenda even after giving his word that he would not do so.
In some cases, the money was never allocated to begin with. According to a report prepared by the city's budget analyst, "The Board of Supervisors approved $37,534,393 in monies that were restored in the FY 2008-2009 budget, which include $30,657,078 in General Fund monies and $6,877,315 in non-<\d>General Fund monies. Yet $15,627,397 in restored monies were either cut to meet mid-year reductions or never expended."
The mistrust generated by this episode and others prompted Sups. Chris Daly, Ross Mirkarimi, and David Campos to push for a series of last-minute changes that were designed to shield critical services from future cuts and give the board some power in its dealings with the Mayor's Office.
"We need a hedge. We need a contingency. If we put a number of items on reserve ... it gives us leverage," Mirkarimi noted. A Campos motion to place $45 million on reserve from the city's seven largest departments was approved by the progressives on a 6-5 vote. Mirkarimi also succeeded in winning approval for a motion to move $900,000 from the trial courts to restore cuts to the Public Defender's and District Attorney's offices.
Other proposals failed to win over Avalos and Chiu, such as Mirkarimi's pitch to target reserve funding for mayoral projects, including the Community Justice Center, 311 call center, and Newsom's bloated communications staff. Daly's suggestion to put $300 million on reserve also went nowhere.
"We are on the border of tearing apart a lot of goodwill," Avalos warned. "A $300 million reserve gets to toxic levels. I would be remiss in not saying that the mayor did give us his word. I believe that there was a new Board of Supervisors elected and ... a new spirit of negotiation and collaboration in City Hall."
But Daly, making scathing references to "Gavin Christopher Newsom" as he fumed about budget cuts, clearly wasn't buying it. Also on the afternoon's agenda was his proposal to place a charter amendment on the ballot that would force the mayor to fund board-approved programs in the budget.
"Without it, we only have blunt instruments at our disposal," Daly said. "A blunt instrument is to take a significant fund, put it on reserve and have a hostage to make sure the administration doesn't use this most significant loophole. This is crafted to allow a majority of the Board of Supervisors to place a special marker on an appropriation that the board feels strongly about."
But Daly's idea went down in flames after Chiu and Avalos voted no along with Sups. Michela Alioto-Pier, Bevan Dufty, Sophie Maxwell, Sean Elsbernd and Carmen Chu. Afterward, Daly left the chambers and later returned to circulate a letter addressed to Chiu reading, "I am no longer interested in serving as Chair of the Rules Committee or Vice Chair of the City Operations and Neighborhood Services Committee."
Daly wasn't the only one not feeling this new spirit of collaboration. All the last-minute changes clearly exasperated Elsbernd, who paced his corner of the room for much of the meeting, rubbing his forehead, and looking irritated. Eventually, Elsbernd and Chu were the only two votes against the final budget.
The prospect of new revenue measures also dimmed at the meeting. A proposal to place a measure on the November ballot calling for a 0.5 percent sales tax hike fell short of the eight votes it needed (Alioto-Pier, Chu, Dufty, and Elsbernd voted no). And it's still too early to say whether a move to place a vehicle tax on the ballot can move forward because it's contingent on state legislation.
The state's funding raid could also hit the city hard. Leo Levenson, budget and analysis director with the San Francisco Office of the Controller, told the Guardian the city stands to lose $71 million in General Fund dollars and $32 million in other funds, although those numbers were still in flux at press time.
"The state must repay these funds within three years with interest," Levenson explained. "It is likely that San Francisco could be able to borrow money to mitigate the short-term financial impacts of this proposal, since the state is legally obligated to repay the funds within three years."
If the state goes after the gas tax, it could impact the city's General Fund by an additional $18 million, Levenson noted, "so the city would need to backfill this reduction to sustain basic street cleaning operations."
So budget season isn't over yet.
Gabrielle Poccia contributed to this report.