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San Francisco forecasts grim economic future due to Covid-19

San Francisco is facing a dire economic situation from the Covid-19 pandemic and faces projected revenue shortfalls for the current fiscal year and the two upcoming fiscal years.

A joint memo released Tuesday by the Mayor’s Budget Office, City Controller’s Office and Budget and Legislative Analyst, show loses estimated in the current fiscal year between $167 million to $288 million driven by losses from the hotel and transfer tax.

The memo outlines further losses in the next fiscal years between $324 million and $575 million in the 2020-2021 fiscal year, and between $225 million and $417 million in the 2021-2022 fiscal year.

In total, combined with prior budget deficit projections, city officials estimate the budget shortfall at $1.1 billion to $1.7 billion.

SFBay Bay Area coronavirus dashboard. Jesse Garnier/SFBay
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City Controller Ben Rosenfield said Tuesday at the Board of Supervisors virtual meeting:

“A recession is near at this point if we’re not already in one.”

Rosenfield said about 14,000 businesses have been either fully or partially affected by the shelter-in-place order, which city officials announced will be now extended to last until May 3.

About 166,000 employees are impacted by the order.

Mayor London Breed said in a statement about the updated budget projections:

“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.”

Rosenfield said the new projections does include the additional costs related to The City’s efforts to help residents and businesses during the emergency nor does it include federal or state funding to offset costs during the pandemic.

With the new projected figures, The City will delay its budget timeline by two months to provide City Hall budget staffers to match expenditures with the projected lower revenues.

The mayor has already written a letter to all city department heads warning them about budget situation and gave orders to only hire essential workers; evaluate and pause non-essential capital projects funded in the current year; review and pause new programs in prior budgets that have not started.

By June 1, Breed will submit an interim budget to the Board of Supervisors. Following the board’s budget process, the budget will go to Breed by Oct. 1 for her signature.

Supervisor Sandra Lee Fewer, who chairs the board’s Budget and Finance Committee said:

“I am clear as budget chair that we will have difficult decisions with for us as a city in the coming weeks and months to get a balanced budget for both the current fiscal year and the coming two years.”

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