Controller warns San Francisco budget relies on $1 billion in one‑time sources; flags reserve drawdown and downtown tax risks

Ben Rosenfeld, San Franciscos controller, told the Budget & Appropriations Committee on June 15 that the mayors proposed two‑year budget relies heavily on one‑time revenue and carries elevated risks as the city moves beyond the pandemic. "The budget is heavily reliant on one‑time sources," Rosenfeld said, noting roughly $1,000,000,000 of one‑time federal reimbursements, disaster funds, reserves and fund balance underpin the plan.

Rosenfeld and Carol Lou, the controllers revenue manager, said reserves would be drawn down substantially under the proposal. "If the proposed budget is adopted as proposed, we will have drawn about 40% of our reserves versus our pre‑pandemic level," Rosenfeld said, describing the strategy as a bridge through a still‑uncertain recovery.

The controllers letter also flagged two structural revenue concerns. First, transfer taxes remain extremely volatile; a small share of high‑value transactions produced unusually large revenues in 2021 and similar windfalls should not be treated as recurring. Second, business tax forecasts hinge on assumptions about how many office workers return — controller staff use a working assumption of a 33% telecommute rate, which lowers business tax receipts versus pre‑pandemic baselines and reduces daytime population‑sensitive revenues like sales and parking taxes.

Supervisors pressed the controllers office for the evidentiary basis of the telecommute assumption and whether the budgets reliance on one‑time funds is an acceptable plan. Rosenfeld repeated the offices view that assumptions are reasonable but stressed the need for active management by both the mayor and the board during the fiscal year.

The committee took the controllers report under formal action and voted to "hear and file" the hearing record by roll call vote; the motion passed unanimously.

What happens next: Rosenfeld urged supervisors to treat the two‑year spending plan as a managed approach rather than a permanent expansion, and recommended continued monitoring of revenues and additional contingency planning when the board considers adoption later this summer.