Committee forwards five-year financial plan to full board after federal aid improves near-term outlook

Ashley Grafenberger, the mayor's budget director, told the Budget and Appropriations Committee on April 21 that the city's December baseline projection showed a roughly $653 million shortfall for the upcoming two-year budget window, driven by slow revenue recovery, wage and benefit assumptions, and ongoing COVID-19 response costs.

"That $653,000,000 shortfall that we were projecting in December informed the instructions that the mayor issued to departments," Grafenberger said. She said the March update incorporated new information ' including updated controller projections, improved pension returns, FEMA guidance and most notably the American Rescue Plan ' and that together those changes produced roughly a $630 million improvement in the near-term outlook.

Grafenberger told the committee the American Rescue Plan includes about $636 million in direct local aid to San Francisco; the administration incorporated those one-time federal dollars in the March projection to offset revenue loss and avoid more painful cuts in the immediate budget. She cautioned the committee, however, that the federal aid is one-time and that structural shortfalls reappear in the plan once those funds expire in later years.

Controller's Office staff explained the revenue side of the update: recent adjustments to property tax projections and a state controller guidance change for ERAF allocations increased general fund retention, while economically sensitive taxes such as parking, business and hotel taxes remain depressed and have not yet recovered.

After the presentation and questions, Chair Matt Haney moved to forward Item 3 (the resolution adopting the five-year financial plan pursuant to Charter section 9.119) to the full Board of Supervisors with a positive recommendation; President Walton seconded and the committee approved the motion on a 5-0 roll-call vote. The committee also voted to continue Item 2 (updates on the city's economic and financial condition) to the call of the chair.

The committee's action sends the resolution to the full board for consideration and preserves committee oversight as staff incorporate upcoming May state and nine-month updates into the budget process.