1. 16 th Annual Real Estate Conference The New Reality Of California Budgets San Francisco Assessor-Recorder Phil Ting May 24, 2011

2. Two Things All Voters Agree On  No New Taxes  Don't Cut My Services

3. SF’s Budget Crisis Is Not Unique  National League of Cities report Personnel Cuts - 79% of cities Personnel Cuts - 79% of cities Capital Projects - 69% of cities Capital Projects - 69% of cities  San Francisco's 5-yr plan includes $433M in revenue growth Still have $829M deficit in the 5 th year (FY15-16) Still have $829M deficit in the 5 th year (FY15-16)  SF must define program priorities instead of across the board cuts  Need measurable outcomes to determine how much funding required to achieve program objectives

4. SF's Projected General Fund Budget Gap $283M (FY11-12) to $829M (FY15-16)

5. How Did San Francisco Get Here?  Economic downturn reduced revenues General Fund revenues down $139M (5%) from FY08-09 to FY10-11 General Fund revenues down $139M (5%) from FY08-09 to FY10-11 AAB appeals filed increased 570% over past two years AAB appeals filed increased 570% over past two years 9% of SF’s parcels have a temporary (Prop 8) reduction compared with 26% statewide 9% of SF’s parcels have a temporary (Prop 8) reduction compared with 26% statewide  Increase demand for services 41% increase in food requests – 30% of demand unmet 41% increase in food requests – 30% of demand unmet 61% increase in residents on food stamps over past 2 years 61% increase in residents on food stamps over past 2 years SF established call center to handle food stamp demand – 10,000 questions a month on that subject alone SF established call center to handle food stamp demand – 10,000 questions a month on that subject alone

6.  Constraints on both Raising Revenue and Cutting Expenses 2/3 vote to pass taxes 2/3 vote to pass taxes Wages and benefits governed by contract Wages and benefits governed by contract  Personnel costs continue to increase 25% of the $4.48B CCSF currently owes employees in pensions is unfunded 25% of the $4.48B CCSF currently owes employees in pensions is unfunded  City’s spending on pension costs has tripled in the past decade $125M to $357M $125M to $357M How Did San Francisco Get Here?

7. San Francisco Tightening Its Belt  Sample of Cuts Made in FY10-11 $20M in transportation, street, sewer and sidewalk repair and maintenance $20M in transportation, street, sewer and sidewalk repair and maintenance $15M in salaries from SF Sheriff $15M in salaries from SF Sheriff $7.5M in salaries from SFPD $7.5M in salaries from SFPD

8. San Francisco Needs $829M  Need $829M

9. What Can San Francisco Do Going Forward?  Pensions: put retirement payouts on sound financial footing Raise retirement age for new employees Raise retirement age for new employees Increase contributions for all employees who earn over $50,000 Increase contributions for all employees who earn over $50,000 Stop pension spiking; salary over 3 years Stop pension spiking; salary over 3 years  Managing health benefits costs Improve employees’ health through preventative care Improve employees’ health through preventative care Increase cost sharing with employees and retirees Increase cost sharing with employees and retirees Each 5% decrease in health care costs will save $30 million Each 5% decrease in health care costs will save $30 million  Saves $100M annually

10. San Francisco Needs $829M  Need $829M  Reform Pension and Health$100M

11. What Can San Francisco Do? Contain Costs - Active Employees  Wages & salaries projected to increase 32% over next five years ($647 million total)  Existing wage concessions ($230 million over two years) expire in FY11-12  Each 1% reduction in wage costs saves $12 million  Concessions save $115M annually

12. San Francisco Needs $829M  Need $829M  Reform Pension and Health$100M  Wage Concessions$115M

13. What’s The Impact Of Drastic Cuts?  Police 20% cut = $80M = 960 police officers 20% cut = $80M = 960 police officers  Fire 20% cut = $53M = close 8 of 42 firehouses 20% cut = $53M = close 8 of 42 firehouses  Public Health 20% general fund = $109M = less services for mental health, HIV prevention, H1N1 inoculations 20% general fund = $109M = less services for mental health, HIV prevention, H1N1 inoculations  Total Savings = $242M Not an option – no public support Not an option – no public support Doesn't close 1st year gap! Doesn't close 1st year gap!

14. San Francisco Needs $829M  Need $829M  Reform Pension and Health$100M  Wage Concessions$115M  20% Police, Fire, Health Cuts$242M Gap With Drastic Cuts$372M

15. Additional Budget Tricks Additional Budget Tricks  Restructure Debt/Delay Capital Spending  Limit Inflation Allowances  Miscellaneous Dept Savings  Smoke and Mirrors

16. San Francisco Needs $829M  Need $829M  Reform Pension and Health$100M  Wage Concessions$115M  Budget Cuts$242M  Budget Tricks$218M Still Remaining$154M

17. Show Me The Money!  $433M revenue growth from improved economy already in 5-yr plan  New revenue needed in addition  Revenue increases require voter approval (Prop 13 and 26)  Rate adjustments for permits, fees and other revenues  Give cities local taxing autonomy

18. Property Taxes Contributed 36% ($985M) Of FY09-10 General Fund Revenues

19. Transfer Tax Revenue $43M Over Budget In FY10-11

20. How Can San Francisco Deliver $154M in New Revenue By FY15-16?   Sales Tax   Hotel Tax   Parcel Tax   Payroll Tax   Permit & Fees   Local Autonomy

21. San Francisco Will Come Out Ahead  First ever 5-yr financial plan released  San Francisco needs to raise revenue - avoid one-time band aids  City must define program priorities instead of across the board cuts - structural reform  Improve efficiency - use measurable outcomes to determine funding required to achieve the program objectives (SPUR)

22. That’s All Folks

23. 2010-11 General Fund Uses  Salaries = 37%  Benefits = 14%  Non-Personnel Operating Costs = 17%  Transfers Out = 14%  Aid Assistance = 10%  Grants = 5%