(Bloomberg) -- San Francisco Mayor London Breed on Friday proposed a budget that fills a $1.5 billion shortfall through June 2022 by drawing down reserves and asking employee unions to defer wage increases or risk layoffs.
In June, Breed presented an interim budget that allowed essential spending to continue while her administration grappled with resolving the deficits triggered by the coronavirus pandemic. She must sign a budget approved by the board of supervisors by Oct. 1.
“The public health and economic impacts of the COVID-19 crisis on our communities were not only unexpected, but stark and immediate,” Breed said in a letter accompanying her blueprint. “When crafting this budget, it was a priority that it be balanced responsibly with a focus on preserving jobs and critical services, while also recognizing the significant challenges that still lie ahead for San Francisco.”
San Francisco, at the epicenter of the nation’s technology industry, hasn’t been immune to the unprecedented crisis that may result in more than $360 billion in revenue shortfalls for cities nationwide over the next three years, according to the National League of Cities. San Francisco expects its gap to hit around $3.6 billion over the next four years, and the city’s fiscal analysts warn that it may grow depending on future outbreaks and the economic recovery.
Under the proposal, the city would draw down $500 million in reserves over the next three years, while saving another $500 million for future shocks. It would save $270 million by deferring wage increases over the next two years and cut additional costs among departments by 10% this year and 15% in the year ending June 2022. The budget also assumes that city voters in November would approve a revamp in business taxes that would provide $300 million over the next two years.
With restaurants and stores shuttered and hotels vacant, the city expects about an 8% drop in revenue for this year ending in June 2021, with the biggest declines in business, lodging and transfer taxes. The general fund this year is $6.2 billion.
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