San Francisco heads into $53 million deficit

SAN FRANCISCO (KGO) -- There is a new budget crisis facing Bay Area cities and it's going to mean another round of painful cuts, or at the very least, some very creative solutions.

San Francisco is projecting a $28 million deficit by the end of the year.

Five months ago, San Francisco passed its current budget, but now there is new information on citywide revenue. Simply put, not enough of it is coming in. The city controller now predicts there will be a $53 million deficit unless serious cuts are made.

Property taxes are San Francisco's largest source of revenue. Now the bad news is the city is expected to bring in $35 million less in property taxes this year.

Supervisor Sean Elsbernd blames it on the housing market. He says "Two years ago there were 350 appeals to our assessor's office for property tax relief. This year, just two years removed, 4,000."

In addition to that, the city expects to lose nearly $25 million in payroll taxes. That's because no one thought San Francisco's unemployment numbers would exceed 10 percent.

The city's controller says it is getting harder to find places to cut.

"Fewer choices left, fewer places to cut," says controller Ben Rosenfield.

And already some departments are expected to go over their budget, like the fire department, the sheriff's department, and superior court.

"The jail population is higher than it was anticipated so the sheriff's office is overspending their budget. We know the public defender and the courts are both projected to overspend their current year budgets," says Rosenfield.

"It's very serious, it's very difficult and we have to ask all San Franciscans to tighten our belts as what they can expect from city government," says board president David Chiu.

The mayor's office announced it would send out letters to department heads alerting them of how much they will need to cut. Still, Mayor Gavin Newsom has yet to speak to reporters, or to the board for that matter, about these possible cuts.

"His staff is working on the budget. They are probably getting some indication from him about what decisions to make, but it's time for the mayor to come forward and get involved," says Supervisor John Avalos.

Newsom hasn't been seen much since he dropped out of the governor's race two weeks ago. Meanwhile, the controller's office is now working on the 2010-2011 budget and they're already talking about a projected $400 million deficit for San Francisco.

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