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Mayor Lee Presents Proposed Balanced Budget For Fiscal Year 2014-15 & 2015-16

Mayor’s Two-Year Budget Grows Economy, Creates Jobs, Proposes Historic Investments in Housing & Transportation Infrastructure, Strengthens Public Safety & Protects Social Services for Most in Need

Mayor Edwin M. Lee today presented his proposed two-year balanced budget for Fiscal Year 2014-15 and 2015-16. The Mayor’s proposal balances a two year budget that closes budget deficits of $66.7 million in FY 2014-15 and $133.4 million in FY 2015-16. To deliver this two-year consensus budget proposal, Mayor Lee worked with the Board of Supervisors and heard directly from residents and community leaders in their districts, held an online budget town hall, and met with hundreds of residents, nonprofit organizations, City Commissioners, labor organizations, business owners, and advocates to discuss priorities and address concerns.

“We are making strategic investments to grow our economy, create jobs and make sure that our City remains affordable for low and middle income families,” said Mayor Lee. “This responsible and balanced budget protects social services for people who need them most, is affordable over the long term, increases City services including public safety; and supports our continued economic recovery. We are making historic investments in housing, transportation, and education. But the hard work is not yet done, and I look forward to working with the Board of Supervisors to deliver a budget that invests in the people of San Francisco.”

“As Chair of the Budget and Finance committee, I look forward to reviewing the Mayor’s budget and working with my fellow committee members, our Budget and Legislative Analyst, department heads and community leaders to present a budget that reflects all priorities of all San Franciscans,” said Supervisor Mark Farrell.

Mayor Lee’s two-year budget invests in people who live, work and visit San Francisco; protects the social safety net and supports seniors, youth and residents who need it the most; invests in housing, transportation and affordability for low-income and working class families; and supports the City’s critical infrastructure and thriving diverse neighborhood corridors.

The economic growth and activity in San Francisco, which few envisioned a few years ago, has also led to rising prices for homes, rental properties, and other goods and services. This budget balances the prosperity of the economic boom with realities faced by San Franciscans by proposing smart, responsible, and targeted investments to make San Francisco a better and more affordable place to live and work for everyone.

Housing Opportunities for All San Francisco Residents
The shortage of housing that is affordable to working and low and middle income people has become a genuine crisis and demands solutions. Earlier this year, Mayor Lee set an aggressive goal to complete 30,000 new and rehabilitated homes by 2020, with at least one-third of those permanently affordable to low and moderate income families. Two years ago, San Francisco voters created the Housing Trust Fund to create a $1.5 billion dollar stream of funding for affordable housing for low- and middle-income residents over the next 30 years. To do more, in addition to the $44.4 million from the Housing Trust Fund, Mayor Lee is including $50 million in additional new funding to expedite affordable housing projects over the next two years in this budget. These funds represent a significant infusion to fill gap funding on projects and seed new projects throughout San Francisco. In addition to creating more housing for low- and middle-income residents, this budget focuses on re-envisioning and transforming public housing sites, reducing obstacles and red tape that slow down construction, and continuing funding for eviction prevention and rapid re-housing.

Increasing the Minimum Wage
In the current environment of increasing costs, there are active discussions among representatives of the business, non-profit and labor communities about increasing the City’s minimum wage. This budget reflects the Mayor’s commitment to a responsible minimum wage increase by including a minimum wage reserve to pay for increased wages for both internal and contracted City-funded staff.

Service Increases to Make San Francisco More Livable
The Mayor’s proposed budget increases city service to the public. Reliable, quality public service is an important aspect of how San Franciscans feel about living in the City. Over the next two years, residents will see a 10 percent service increase at Muni, to address crowding and reliability. In addition, building on the progress the City has made with the Road Repaving and Street Safety Bond, this two-year budget fully funds San Francisco’s street repaving program, which will repave 1,700 blocks over the next two years. The budget also expands services at Public Works and the Recreation and Park Departments to keep City streets cleaner, maintain the City’s trees, and promote public safety throughout the parks and open space.

The budget continues to fund the City’s six-year public safety hiring plan to train the next generation of public safety personnel. Over the next two years, San Francisco will hire 300 new police officers, 96 firefighters, 30 paramedics and 10 911 dispatchers to enhance community safety.

Maintaining and Improving Our City’s Social Safety Net
Many of the City’s most vulnerable residents are also in need of additional social services. This budget reflects this need by funding an additional $51 million over the next two years to stabilize and transition struggling individuals and families towards self-sufficiency, including:
• $21.6 million in increased investments in homeless and eviction prevention, in shelter and in other homeless supports, and in supportive housing for veterans, transitional aged youth, and families;
• $6.2 million in enhanced mental health services for the chronically homeless;
• $2.8 million in investments for seniors including additional food security and meal support as well as investments to prevent and address elder abuse; and
• $20.8 million for aid programs at the Human Services Agency.

In addition, the proposed budget includes the full restoration of $3 million annually in Federal cuts to HIV/AIDS prevention and services, and $8.8 million to the Department of Public Health’s continuum of mental health and substance abuse treatment services.

The budget includes a 1.5 percent cost-of-doing-business increase for nonprofit contractors to ensure the continued delivery of quality, effective services in the face of rising costs. Over the next three years, the City will also disburse $4.5 million in nonprofit rent stabilization services and launch a nonprofit sector initiative to provide strategic, technical assistance to ensure long-term stability and viability of the nonprofit sector.

Safe, Reliable, and Affordable Transportation
San Francisco needs a transportation system that serves the needs of all users by providing efficient and low-cost travel options to the public. The San Francisco Municipal Transportation Agency’s (SFMTA) proposed FY 2014-15 and 2015-16 budget addresses this need through a combination of service increases, reliability improvements, and reduced or free fares for targeted populations. The SFMTA’s proposed budget includes funding for a 10 percent service increase over the next two years to add additional hours of service while addressing crowding and reliability issues. These increases will result in service that is more frequent, rapid, and dependable.

In January 2013, Mayor Lee called for a Transportation Task Force to develop a coordinated set of priorities and actionable recommendations for funding the City’s transportation infrastructure between now and the year 2030. On May 13, 2014 the Mayor and all 11 members of the Board of Supervisors introduced one of the key recommendations of the Transportation Task Force, a proposed $500 million General Obligation bond for the November 2014 ballot. This bond will increase Muni reliability and travel speed, upgrade transit stops and stations, improve pedestrian and bicycle safety, and prepare for growth on the City’s busiest travel corridors, all without raising property taxes.

Additionally, the Mayor’s proposed budget includes full funding of $83.5 million over the next two years for the City’s street repaving program. Paving in excess of 1,700 blocks over the next two years will continue to move our streets towards a “good” Pavement Condition Index (PCI), which will prevent more expensive street repaving costs in the future, reduce repair expenses for Muni, and lower car maintenance costs for San Francisco drivers. These investments will help ensure that the City’s transit system is faster, more accessible, and reliable for the long term. The budget also includes $3 million in additional funding for Vision Zero safety projects to eliminate traffic-related deaths in San Francisco.

Investing in Children and Families
This November, the reauthorization of the Children’s Fund and the Public Education Enrichment Fund, which provide significant support to San Francisco’s children and families, will be on the ballot. The FY 2014-15 and 2015-16 proposed budget assumes reauthorization of these measures and includes $291.1 million between the two funds, of which $126.3 million will be in direct funding to the San Francisco Unified School District; $55.9 million for Preschool for All, which will provide 4,100 children with subsidized, quality early education; and $108.9 million will flow into the Children’s Fund.

The budget also supports the Mayor’s Summer Jobs+ initiative, which will help 7,000 young San Franciscans get a job or paid internship in the public, private, or non-profit sectors. For many of these low-income and disconnected San Francisco youth, this is their first professional experience.

Long-Term Financial Sustainability
The Mayor’s Proposed Budget balances the need for increased and enhanced services for City residents with the need to ensure long-term financial stability. Coming to agreement with our labor unions, making strategic one-time investments in capital and information technology, and maintaining strong reserves are all part of this approach to fiscal discipline.

In past budget cycles, when the City faced significant budgetary shortfalls, the City prioritized direct services to the most vulnerable over important one-time investments in capital and information technology. Now in better financial times, the Mayor’s proposed budget prioritizes smart investments that save the City money in the long run while reducing long-term financial obligations, including:
• $647.5 million in capital investments over the next two years, supporting approximately 6,000 construction and related industry jobs;
• $213 million in General Fund support for capital and infrastructure, including full funding of the recommended level in the first year of the budget; and
• $32.7 million in General Fund Investments for information technology systems to improve the way the City does business.

In addition to making strategic one-time investments, this budget also continues to grow the City’s reserves to offset the impact if an economic downturn does occur. Consistent with the City’s Financial Policies, the City’s reserves for economic stabilization will also grow over the next two years. By the end of FY 2015-16 the City projects to have $234.9 million across its General Reserve, Budget Stabilization Reserve and Rainy Day Reserve. These reserves function as the City’s savings account; protecting the City’s budget and service levels from economic uncertainty. In 2013, the ratings for City’s General Obligation bonds were upgraded by Standard & Poor, Fitch, and Moody’s; all three agencies noted the City’s strong financial performance, growing reserves, and increasingly responsible financial practices as the reasons for their upgrades.

In February 2014, the City began negotiations with 27 of its employee organizations to craft new labor contracts. The new contracts cover over 24,000 employees for the next three years. The City is now in the final stage of negotiations, as the majority of the open contracts have been settled or arbitrated. With a few small exceptions, the agreements include raises of 3 percent in October 2014, 3.25 percent in October 2015, and between 2.25-3.25 percent (depending on inflation) in July of 2016. These settlements provide a fair wage increase for the City’s workforce and provide better financial stability for the City in the form of known labor cost increases for the next three years.

As San Francisco’s economy recovers and grows, Mayor Lee will continue to encourage and challenge the private sector to strengthen civic engagement, bringing together non-profit leaders, business leaders and consulted with leaders from philanthropy to create and enhance public private partnerships. In the coming year, Mayor Lee will launch an Office of Strategic Partnerships in the Mayor’s Office to work more deliberately with foundations, non-profits and the private sector to do more good for more people.

Mayor Lee remains focused on jobs and the economy, and this proposed budget includes a number of economic and workforce development initiatives to support small businesses, drive job creation and strengthen diverse neighborhoods. This includes funding for an online Business Portal that will cut through bureaucratic red tape and make starting and operating a business in San Francisco easier and expansion of free Wi-Fi access across the City, specifically targeting commercial corridors.

The City Charter requires that the Mayor submit a balanced budget proposal by the first working day in June. Mayor Lee will continue to work with the Board of Supervisors to develop the best balanced budget for the City and County of San Francisco over the next month.

The Mayor’s proposed balanced budget for Fiscal Year 2014-15 and 2015-16 is available online, go to: