(Bloomberg) -- San Francisco Mayor London Breed on Wednesday unveiled a two-year budget that increases police and homelessness funding as the city tries to lure businesses back to its hollowed-out downtown.
The mayor’s $6.85 billion general fund budget underscores San Francisco’s woes as the city faces slumping tax revenue, some of the nation’s lowest office occupancy rates, and a chorus of business leaders pushing officials to take a tougher stance on open-air drug markets.
Breed has positioned herself as a moderate in San Francisco’s political landscape. Tensions over her policing stance came to a head last week when a brick thrown in her direction halted an outdoor City Council meeting. Her budget, which seeks to boost police staffing by 220 officers, will likely face pushback from the progressive majority on the Board of Supervisors.
“We have been forced to make some really challenging changes to our budget,” Breed said during an event announcing her budget. “How we get people and businesses back on their feet is exactly what this budget is proposing to do.”
Her budget also looks to add 600 shelter beds for unhoused people and another 400 treatment beds for people experiencing mental and drug crises. Breed is looking to cut costs across municipal departments by 5% to 8%. Her budget doesn’t include funding to address the city’s transit deficit, which could force SFMTA, the bus and rail agency, to cut as many as 20 bus lines starting this summer.
Looming over San Francisco’s budget fight is the prospect that city finances could worsen in the coming years as a tech exodus and downtown’s sluggish recovery metastasize into deeper cuts to city services.
A budget forecast in March projected the city’s single-year deficit to grow to $724 million in 2025 and over $1 billion in 2026.
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Office vacancy rates continue to rise, hitting a historic 29.4% in the first quarter, according to brokerage CBRE Group Inc. Prominent tech companies including Salesforce Inc. and Uber Technologies Inc. have downsized their footprint in the city.
Under Breed’s proposal, San Francisco stands to lose as much as $22 million a year in tax holidays and incentive programs aimed at encouraging the return of businesses to downtown.
“It’s really bad in San Francisco,” Mark Ritchie, a commercial real estate broker with 40 years of experience in the region, said of the office glut. “Nobody knows what the solution is.”
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