S.F. faces $575.6 million budget deficit

Heather Knight, Chronicle Staff Writer

Tuesday, December 9, 2008

(12-08) 20:43 PST — San Francisco’s budget deficit for next year has grown to $575.6 million – equal to nearly half the city’s discretionary spending account. It’s a financial crisis Mayor Gavin Newsom called one of the worst the city has experienced since the 1930s.

Newsom will announce his plan for cutting up to $125 million from this year’s $6.6 billion budget today, but gave few details about what it will include.

“This is nothing we’ve seen before,” he told The Chronicle. “As difficult as these cuts will be, the real challenge is in the next three, four, six months.”

Today’s announcement is expected to include proposals to cancel police academy classes, lay off some high-paid attorneys and cut health services, including outpatient treatment programs for the mentally ill and drug addicted.

One thing that won’t be part of the mayor’s cuts package: slashing by 50 percent the city funds given to the Symphony, Opera and Ballet. Supervisor Aaron Peskin called for such cuts last week; if adopted, they would save the city about $1.1 million.

Peskin is also expected to present pages of cost-cutting ideas today, including the arts proposal, as a way to prevent deep cuts to the Department of Public Health and instead spread the pain around.

But Newsom said that while those three cultural institutions and the American Conservatory Theater, the Museum of Modern Art and the Exploratorium will see a 7 percent cut, the 50 percent idea is unnecessary.

“It’s more symbolic than substantive,” he said of Peskin’s proposal. “I want to deal with the real problem, which is hundreds of millions of dollars and not hundreds of thousands.”

Peskin declined to comment Monday.

Salary givebacks or wage freezes from the unions will also not be part of today’s announcement. Newsom said that will have to be part of the budget talks for the 2009-10 year, which starts July 1.

He said he doesn’t necessarily want the Police Officers Association to give back its coming 7 percent pay hike, though, because San Francisco police officers make less than those in small Bay Area cities like Berkeley, Fairfield and Fremont, making recruitment difficult.

This year the mayor had control over about $1.2 billion in discretionary spending, with the rest of the city budget required by law to be spent in specific ways.

Nani Coloretti, the mayor’s budget director, said the midyear cuts will help because programs and positions eliminated now will mean continued savings next year.

“It means you feel pain over 18 months, not over 12,” she said.

Downgrading positions and charging enterprise departments like Muni more for city services are also ways to save money without eliminating entire programs, she said.

Coloretti and Steve Kawa, the mayor’s chief of staff, have been making the rounds to supervisors’ offices in recent days to prepare them for today’s extensive budget cuts.

However, supervisors said the mayor’s representatives have not shared many specifics during these meetings and some have complained they’ve been left in the dark.

Newsom countered that “the board will have ample time to deal with the real issue, which is next year’s budget.”

Chronicle staff writer Marisa Lagos contributed to this report. E-mail Heather Knight at hknight@sfchronicle.com.