San Francisco’s budget deficit could hit $1.4 billion, city officials are warning, as the city struggles with out-of-control homelessness and drugs on its streets.
Businesses have fled office buildings and storefronts downtown, where an open-air drug market thrives every day depriving the city by the bay of taxes it relied on and leaving it in a tight spot.
On Wednesday, Mayor London Breed’s budget director laid out the grim situation during a budget presentation.
“This is not going to be a positive presentation today. We’re in a tough spot,” budget director Anna Duning said, The San Francisco Standard reported.
The city’s budget deficit could reach nearly $1.4 billion by 2027, officials projected. The fiscal year starting in July will have a $245 million deficit, and next year, the deficit will likely top half a billion dollars.
Tax revenue from businesses, sales, hotels, parking, and property transfers has dropped by roughly 20%. Tourism also never fully recovered after the pandemic, adding to the city’s financial woes.
“What we saw during the pandemic was a seismic shift in the economic foundation of this city,” Duning said.
City employee costs are rising as well, particularly health care costs for employees, which reportedly spiked nearly 10% this year. Meanwhile, 25,000 city workers have their contracts expiring at the end of June, and the new contract negotiations are expected to be tough.
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Initially, Breed had proposed record spending, especially on homelessness and the police department, but in December, she told city departments to prepare for 10% budget cuts.
On Wednesday, Supervisor Connie Chan said, “the decisions we make today, in this fiscal year and in the next fiscal year, is actually really critical.”
San Francisco has been in the throes of a homelessness and drug crisis that has come with rampant crime for years now. The city consistently struggles to make a dent in the humanitarian crisis unfolding every day on the streets.
Homelessness has only gotten worse since before the pandemic. About 38,000 people are homeless in the Bay Area on a given night. That’s up 35% since 2019. More than 7,000 people are homeless in San Francisco itself.
San Francisco also has a deadly drug crisis driven by fentanyl, and the city saw record fatal overdoses last year. A total of 752 people died from drug overdoses in San Francisco between January and November, more deaths than in any other year, preliminary data from the Chief Medical Examiner’s Office shows.
Overall crime was down last year, but certain types of crime were up, including car thefts, San Francisco police data show. Compared to 2019 before the pandemic, however, many types of crime are still elevated, including murders, robberies, burglary, and arson.