City Rainy Day Fund a challenge
to coming budget
Mayor Gavin Newsom tells reporters improved economy ironically
creates first time ever challenge to closing city budget.
By Luke Thomas and Pat
January 19, 2006
The current San Francisco economic upturn ironically makes balancing
next year's city budget more challenging, according to Mayor Gavin
For the first time, the city will lose immediate access to 75%
of revenue which exceed last year's revenues by 5%.
Close to seventy-five cents on those excess revenue dollars must
be set aside for the city's new Rainy Day Fund, Newsom said.
City Controller Ed Harrington is computing a six-month revenue
report, which will be include Rainy Day Fund projection.
Local economic growth this year widened the spread of new city
revenues over municipal income last year. The Rainy Day Fund set
aside is based on that spread.
Newsom pegged coming budget deficit at $80 million. Although
it is much lower than last year's first estimated budget shortfall
of $290 million, the mayor warned closing the deficit will be
challenging due to a number of factors.
The projected deficit does not take inevitable wage increases
into account, the mayor added.
"That projection does not include any base wage increases,
and considering that we have 40 labor contracts that are being
negotiated over the next six months...so I think we need to be
cognizant of that.
"Beyond that there is a very distinctive aspect to this
budget...that we have not experienced ever and that is the Rainy
"What the Rainy Day Fund is going to require us to do is
set aside upwards of 75-cents of every dollar into that fund above
our revenue growth of more than five percent.
"(The) consequence with the set-aside for baseline funded
departments, which represents about sixteen-cents for every dollar,
in addition to the seventy-cents you are talking about net benefits
of additional revenue coming in based upon good economic news.
"This is a new constraint that is something that is going
to make this budget as it appears, and not less challenging..."
City department consolidations and staff eliminations make further
cuts difficult, Newsom continued.
"Additionally, based upon all of the cuts over four years,
those that feel their departments can afford and absorb additional
cuts are few.
"The point being is that I don't know of a department head
that's come into my office suggesting anything but the fact that
they are in desperate need of more, be it the Police Department,
be it the Department of Human Services, and all the work we are
doing on senior abuse and foster care, to deal with the quality
of our streets, to deal with potholes, the PUC with expansion
of Hetch Hetchy...the Redevelopment Agency, the Port...
"In spite of the 1,390 positions that we have eliminated
or consolidated, it's going to be challening again this year,"
First implementation of the Rainy Day Fund stands to improve
the city's bond rating.
"Our bond rating agencies love it and there's fiscal prudence
in establishing the rainy day fund.
"But I don't think anyone intended...this economic prosperity
to experience as we're going to experience it this year,"