San Francisco, CA — Mayor London N. Breed today announced initial, significant projected budget shortfalls as a result of the economic impact of the coronavirus pandemic, as well as an updated budget timeline for the City and County of San Francisco and new measures to support City employees through this difficult time. The report estimates that the prior deficit of $420 million for the upcoming two-year budget from earlier this year, will increase to between $1.1 to $1.7 billion driven by revenue shortfalls related to the public health crisis.

The Joint Report Update issued jointly by Controller Ben Rosenfield, the Board of Supervisors Budget and Legislative Analyst Severin Campbell, and the Mayor’s Budget Office projects significant revenue losses in the current year will continue into the next two fiscal years. In the current fiscal year, the report projects a budget shortfall of between $167 million to $288 million, primarily driven by losses in hotel and transfer tax. The report estimates revenue losses of $330 million to $581 million in FY 2020-21, and losses of $214 million to $382 million in FY 2021-22. Combined with the prior deficit projections, this results in revised shortfall estimates of $1.1 to $1.7 billion.

“The coronavirus pandemic is an immediate threat to our public health and we’re doing everything we can to slow its spread and save lives, but we know that it is also having a major impact on our economy and our City’s revenue. The economic impact that is already hurting our residents and businesses is also going to require difficult decisions by the City moving forward,” said Mayor Breed. “Over the coming weeks and months we will be focused on supporting our residents who have their jobs or their business, while continuing to advocate for more state and federal support. We all need to work together to and make the hard choices to get through this and to get San Francisco back on the road to recovery.”

These projections do not assume additional expenditures associated with the City’s response to the emergency, nor do they assume additional state or federal revenues to offset costs related to the public health crisis. The City’s financial offices will provide a more complete update to these projections in April in light of this unprecedented uncertainty, both taking into account updated information regarding the impact of overall economic trends on City revenues and costs from addressing this health emergency.

Due to the current COVID-19 pandemic, the City’s budget timeline will be delayed for two months. This delay will allow the City to focus on responding to the public health crisis, and provide enough time for City budget staff to develop a plan to bring current year expenditures into alignment with projected lower revenues and prepare for the upcoming budget cycle. The additional time will ensure the City’s response to the significant current year shortfall and upcoming budget deficits are thoughtful and responsible. The decision to push back the budget timeline was a joint decision between Mayor Breed, the Board of Supervisors, and the Controller’s Office.

“At this moment, we must focus our time and resources to the pressing health emergency and the impacts that are unfolding before us. While the economic forecast is troubling, it provides us the opportunity to prepare and to act prudently as we establish a City budget that is able to continue basic services for our residents, while also supporting recovery efforts in a measured, sustainable manner. The Board of Supervisors will be a part of that process every step of the way. We will be shortening summer recess and meeting throughout August to meet the new budget timeline and to provide the public thorough review, analysis, and deliberation. The months and years ahead will be challenging, but we have risen out of crisis before, and we will need to make critical decisions that will lead us back to fiscal health,” said Supervisor Norman Yee, President of the Board of Supervisors.

“As the City works around the clock to respond to the COVID-19 crisis and also assess the economic impact, we simply need more time for an intentional and transparent city budget process,” said Budget Chair Sandra Lee Fewer. “We will undoubtedly have difficult budget decisions ahead of us in the coming weeks and months, but I know that my colleagues and I are ready to work with the Mayor for a comprehensive City budget that will maintain essential City services and protect our most vulnerable residents.”

Over the next month, the Mayor’s Budget Office will develop a plan to bring current costs in alignment with lower projected revenues. The Mayor’s Office will be focused and deliberative to ensure the response to the significant current year shortfall and on-going economic contraction are considered with impacts to City departments, labor partners, and community organization at the forefront.

Today, the Mayor also enacted a number of expanded benefit and leave provisions to support City employees during the emergency. These include:

• Income security and paid leave for City employees through May 1; 
• Providing employees with an additional 80 hours of paid sick leave to use for a variety of circumstances, including the impacts of school closures; 
• Implementing the Emergency Paid Sick Leave provisions under the federal Families First Coronavirus Response Act;  
• Increasing compensatory time off for the extra work employees perform during the emergency, and waiving limits on how much vacation and compensatory time off they can accrue;
• Allowing essential employees who are required to come to work to earn additional floating holidays;
• Establishing a City paid administrative leave program for any essential employee who is required to come to work, in the event they are diagnosed with COVID-19 or have confirmed COVID-19 symptoms.

“With a projected budget shortfall ballooning for the upcoming City’s two-year budget because of the novel coronavirus, my number one priority is ensuring that San Franciscans weather not just this health crisis but the economic crisis too,” said Supervisor Ahsha Safaí. “The economic standstill and the resulting negative effects on San Franciscan’s day-to-day life is undeniable, many are hurting, but San Franciscans should know we will not leave them to fend for themselves. I am proud to have helped craft today’s plan, a plan that guarantees all of our frontline workers an additional two weeks or 80 hours of paid sick-leave to use during this public health crisis so that they can access life-saving care and resources is a win for everyone. We will get through this together and come out stronger, I know it.” 

Earlier today, Mayor Breed issued a letter to Department Heads explaining the actions necessary to offset significant financial losses in the current year. The letter directed departments to help identify cost reductions and to curb spending in the current fiscal year, and instructed departments to focus staff time and resources on their essential workforce, programs, and efforts that help the City respond to the health crisis and support vulnerable residents. Specifically, Mayor Breed instructed that departments: 1) only allow hiring of essential workers; 2) evaluate and pause non-essential capital projects funded in the current year; and 3) review and pause new programs funded in prior budgets that have not started.

To allow for the necessary City response to COVID-19 and to ensure the City has enough time to incorporate changing economic projections into its budget process, the Mayor and the Board of Supervisors has agreed to an updated schedule for the FY 2020-21 and 2021-22 budget process.

Mayor Breed will reissue Budget Instructions to departments in May and Departments will are instructed to submit new department proposals to aid the Mayor in developing her balanced budget in June and July. By June 1^st, the Mayor will introduce a balanced interim budget at the Board of Supervisors. The Mayor will introduce the full two-year FY 2020-21 and FY 2021-22 balanced budget by August 1^st. Following the Budget and Finance Committee Phase and the full Board phase, the budget will go to Mayor Breed for her approval and signature by October 1, 2020.

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