Mayor Daniel Lurie is wresting the budget from the hands of city department leaders, some of whom haven’t made mandated cuts despite the possible loss of Trump administration funding.
Lurie has ordered all San Francisco departments to slash 15% of their budgets to combat a historic $820 million deficit. Nearly half refused or failed to do so.
In what may be Lurie’s most aggressive move since his term began 100 days ago, the mayor’s office emailed all city departments — including Public Works, Homelessness and Supportive Housing, and SF Planning — Thursday evening to inform them that it would conduct a “thorough review” of their budgets to make additional, targeted cuts.
Sophia Kittler, the mayor’s budget director, penned the email to department heads and chief financial officers, warning that the deficit could balloon to nearly $2 billion should the federal government follow through on promised reductions. The Standard obtained the email in a public records request.
“We must reduce City costs and align spending with revenue projections,” Kittler wrote.
“Unfortunately, reductions proposed by departments to date have been insufficient to close the deficit, and there is no additional time.”
San Francisco’s budgeting process is normally a dance among departments, the mayor, and the Board of Supervisors. In late February, city departments submitted budget proposals, which the mayor was expected to incorporate into his budget submission to the Board of Supervisors on June 1. The subsequent negotiations would result in a budget that, by law, must be completed and balanced by July 1.
The number of departments that ignored the mayor’s instructions shocked even insiders. David Ho, a San Francisco-based political consultant, said Lurie’s rebuke of department heads evoked memories of former mayor Willie Brown, who was known for being assertive.
“Shit, they forgot who’s the boss,” Ho said.
For example, instead of trimming spending, the public defender’s office asked for an additional $13.6 million.
“The Public Defender Office remains underfunded in comparison to the rest of the agencies in the City’s criminal legal system and any cuts to the Department’s existing lean budget would have a detrimental effect on its current indispensable staffing and programs,” the department wrote in its budget submission to Lurie’s office.
The department heads’ political calculus was straightforward: They appear to view Lurie as an untested and inexperienced mayor, likely to defer to their expertise. Moreover, any cuts to politically popular programs — from street cleaning to Muni routes — may threaten his honeymoon period with the electorate.
So they rolled him. Now he’s rolling back.
City departments are known to shrug off budget instructions, but the situation is dire. Downtown, San Francisco’s economic engine, generates far less tax revenue as office use has failed to rebound to pre-pandemic levels. And President Donald Trump’s threats have thrown a wrench into financial planning, as uncertainty over federal funding owed to the city looms.
It isn’t just the scofflaw departments that will see Lurie’s budget scythe swing their way. All departments “will receive an additional reduction target,” Kittler wrote.
In the email, Kittler requested lists of grants promised to nonprofits so the mayor’s office can cut spending in “non-core” functions to each department. She also requested a list of all upcoming professional contracts so the budget office can make a “significant reduction” in spending.
Layoffs remain a possibility, she noted, though the mayor’s office intends “to minimize impacts to our existing workforce.”
With a mind toward chaos in the White House and the steep federal reductions sought by Elon Musk’s Department of Government Efficiency, Kittler asked departments to provide a list of federal grants and revenues so the mayor’s budget office and city attorney can “review all federal revenues for risk.”
Anya Worley-Ziegmann, a spokesperson for the People’s Budget Coalition, which represents more than 150 nonprofits, community groups, labor unions and other organizations, said Kittler’s email signals there will be painful service cuts for San Franciscans.
“You’ll see less actual services, mental health services,” Worley-Ziegmann said, as well as reduced support for tenants and workers. “Those options will be defunded.”
Former Mayor London Breed relied on one-time funding sources to plug budget deficits, rather than opting for cuts. In her email to department heads Thursday, Kittler hammered home that this practice has come to an end.
“One-time solutions do not help reduce the structural deficit,” Kittler wrote.