This summer, the city of San Francisco approved a two-year $15.9 billion budget which includes some cuts. But there is fresh news on the budget today and the news is not good.
San Francisco is facing a $936 million deficit over the next two fiscal years as general-fund spending growth far outpaces revenues and federal and state budget policies take their toll, Mayor Daniel Lurie’s administration said Friday…
Friday’s daunting budget update comes after a summer in which The City adopted a roughly $15.9 billion two-year spending plan aimed at closing a deficit of about $800 million.
That budget — which was Lurie’s first and which he signed into law in July — included about $160 million of cuts to a slew of nonprofits that saw reductions or total losses of funding.
“Our city is moving in the right direction,” Lurie said Friday. “We took hundreds of millions out of the historic structural deficit in our last budget, and revenues are growing again.”
Revenues are growing but obviously if you made cuts six months ago to address and $800 million deficit and six months later you’re facing a $936 million deficit that’s not movement in the right direction. So along with announcing the problem, Mayor Luria also called for $400 million in new cuts.
Mayor Daniel Lurie on Friday directed city departments to slash expenditures by $400 million in preparation for another tough budget year spurred by a growing deficit.
The requested cuts will kick-start the second consecutive year of challenging negotiations between the mayor’s office and dozens of city agencies over how to close a shortfall of $936 million, a tug of war that will last into the first few months of 2026. The mayor is asking departments to reduce services, eliminate vacancies, and curtail hiring…
Lurie’s request portends a battle between his office and the city’s politically powerful unions and nonprofits over potential layoffs and cuts.
Lurie’s initial budget this year called for cutting 1,000 jobs, about 90% of them vacant positions, from the city’s payroll. That sparked a fierce union-led opposition campaign over the summer, with a June protest at City Hall resulting in arrests(opens in new tab). In deliberations with progressive Supervisor Connie Chan, who serves as the board’s budget chair and is an ally of labor, Lurie reduced the number of layoffs and ultimately cut about 40 filled positions.
This has been an ongoing problem for years. The city simply spends more than it takes in and a big part of that is that the city has not recovered since the big downturn of the pandemic.
San Francisco has faced repeated annual shortfalls in recent years because its expenses, including labor costs, are outpacing the city’s growth in tax revenue, which is hampered by a tepid economic recovery from the pandemic…
Additionally, while Lurie has welcomed some new businesses to Union Square and the artificial intelligence boom has ramped up leasing activity from tech companies, the city continues to grapple with high office vacancy and many empty downtown storefronts. Tourism to San Francisco is expected to rise modestly this year compared to 2024, but it’s still well below the record visitor volume recorded in 2019.
This is almost certainly going to spark another round of fighting with city unions. Their demands can be accommodated when things are booming but not when the city is struggling as it has been for the past five years.
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