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Supervisor's Report

The state of our economy in San Francisco

This year’s budget process proved that the City and County of San Francisco’s economy is turning around for the better. In July 2012, three cities in California filed for bankruptcy. However, in San Francisco, we are experiencing greater financial stability through measures such as pension reform and more disciplined financial policies, which I have strongly supported. Furthermore, this budget season marks the first time that the City has been required to submit a two-year budget, which encourages long-term planning and better fiscal health for our city.

For Fiscal Year 2012–2013, the initial projected budget shortfall was $263 million, but we closed this gap and produced a balanced budget with the collaboration of our elected officials, department heads, residents, community organizations, and a wide range of stakeholders. Community input was a significant part of the process this year, and the message was clear that job growth, public safety, and other quality of life issues are paramount.

HIGHLIGHTS OF THE BUDGET
Innovation and Job Creation: One of the reasons San Francisco continues to thrive is because of its ability to incentivize job growth. Since early 2011, the City’s unemployment rate has dropped from 9.6 percent to 7.4 percent, and just last year San Francisco created 22,500 new jobs. I am extremely pleased that two pieces of legislation I authored will contribute to San Francisco’s job growth. Both the Small Business Payroll Tax Exemption and the Film Rebate Program will create hundreds, if not thousands, of new jobs in San Francisco.

Public Safety: I have always advocated investing in our citizens by keeping our residents safe from crime and having reliable emergency response teams in place. I was born and raised in the Marina, vividly remember the 1989 earthquake, and believe we need to do everything possible to keep our neighborhoods safe not only on a daily basis, but also in preparation for the next disaster. Due to a large number of retirements in recent years, we have fewer police officers than required by our City Charter, and so few firefighters that up to 50 firefighters are forced to stay on duty every weekend against their will, which not only affects morale but balloons the department’s overtime budget.

For this budget cycle, we approved three new police academy classes that will put 300 new police officers into service over the next two years, helping to make up for the surge in retirements. In response to long-term staffing concerns, the police department also developed a six-year plan to hire 50 new recruits each year so that by 2018 the San Francisco Police Department will finally reach the mandated 1,971 officers.

Additionally, two new fire academy classes will place 84 firefighters into service. The fire department will also conduct classes to train 20 new emergency
medical technicians.

Reserve and Rainy-Day Funds: As one of the most fiscally conservative members of the Board of Supervisors, it was extremely important to me that we adequately fund our City’s budget reserve, which has been significantly depleted during the latest recession. The General Fund Reserve is intended to address revenue weaknesses, expenditure overages, or other programmatic goals not anticipated during the annual budget process, and we deposited $73.7 million into this fund for the next two years. Contributions to the Budget Stabilization Reserve – used to mitigate the negative effects of economic downturns – are based on projections of property transfer tax revenues, and we are depositing over $25 million into this fund over the next two years, raising the reserve balance to $52 million. We also set aside $15 million in a State Reserve to fill expected cuts from this year’s state budget that we know are coming.

EVERY BUDGET IS A COMPROMISE
Given the makeup of the Board of Supervisors, no budget will ever be perfect. There were a number of line items I did not agree with and fought hard to exclude, including the implementation of Sunday parking meters. Also, certain City employees are set to receive a modest wage increase in FY 2013–2014 with the expiration of the 12 furlough days implemented two years ago, which I felt was inappropriate. However, as chair of the Government Audit and Oversight Committee, this spring I reviewed over 30 labor agreements that will ultimately save the City more than $28 million in the next two years. In addition, we will see $40 million in savings to the General Fund from our pension reform measure.

Though certain parts of the budget caused true concern, the final budget reflects priorities that we should all support.

Today, San Francisco is financially sound and we can be proud of the measures put in place at City Hall to protect our current residents and future generations. We cannot take anything for granted as it relates to our local economy, however, and I believe continuing to support fiscally responsible policies, as well as investing in job creation and small businesses in our neighborhood commercial districts, is core to sustaining our current economic growth rate.

I look forward to seeing everyone down on the water August 21–26 as we begin the first America’s Cup races in San Francisco leading up to the 2013 America’s Cup finals.

Mark Farrell is the District 2 supervisor and can be reached at 415-554-7752 or mark.farrell@sfgov.org.
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