Thanks in part to the most recent federal stimulus package, San Francisco’s two-year budget deficit has exponentially shrunk from a projected $653.2 million in January to $22.9 million, a new report from city budget analysts said.
The American Rescue Plan, signed by President Joe Biden earlier this month, gives The City a one-time funding boost of $636 million that will offset some revenue loss caused by the ongoing Covid-19 pandemic.
Mayor London Breed said in a statement Wednesday that without the federal funding, city officials would be forced to make additional cuts, which could include layoffs.
“Thanks to the American Rescue Plan, we’re now able to avoid those terrible choices.”
Breed said The City was able to close out a $1.5 billion deficit last year without laying off city employees.
While the federal stimulus shrinks the current projected deficit over the next two years, a $350 million budget deficit looms for the 2024 fiscal year when federal funding dries up and spending outgrows revenue, according to the Five-Year Financial Plan.
The mayor said:
“At the same time, we still have to fix the ongoing deficits that exist in future years. If we’re not responsible in this budget cycle, we could find ourselves right back here again in the coming years facing the same terrible choices we have been lucky to avoid this time around.”
In a report released Wednesday, officials noted that spending reduced by policymakers in the current budget cycle will directly impact what services and programs can be maintained in the future.
As The City shifts from pandemic mitigation to recovery, the report warns that San Francisco’s financial outlook is uncertain, even with the one-time federal aid.
The report read:
“The temporary nature of this aid, coupled with continued uncertainty stemming from the extraordinary nature of COVID-19 pandemic and its evolving effect on local revenues, presents meaningful downside risk to the City’s financial outlook.”
The mayor is required to a submit a balanced two-year budget proposal to the Board of Supervisors by June 1.