overhead system. you only place a subsidized -- substation every 20 to 30 years. new systems can accommodate not just the current plan, but also the service that we anticipate 32035. the implementation schedule is shown at a high level on this graph. environmental reviews are first critical and we anticipate it will take up to 24 months. during that time, we will be working to move travel time production proposals forward. as well as other complementary capital work. the goal is similar to the other capital plan with projects ready to be implemented at the conclusion of the process. as indicated, we have identified 10% funding for this project. overall capital costs are $170

million has identified to federal sources. the implementation strategy will allow us to shape a funding plan are around the remaining funding gaps. we believe that projects like the travel time proposals, designed to improve operating efficiencies, are going to compete well for discretionary funds. we will be realigning the existing capital programs. an example would beyond terrible street, the city is going to completely rebuild terrible street in 2018. that will include sue wert working, rails, and travel productions built into the work. there is also all of the prioritization complementing the city's street resurfacing plan, looking for opportunities to

leverage other projects when possible. the environmental review process is on a current critical path. we expected to take up to 24 months. there are some steps, as you are aware, that have mandatory time periods. we believe there are opportunities to reduce time for staff led tasks. working particularly with nea on dedicated staffing to move this work forward more quickly. the immediate next step will be competing the scope of work -- completing the scope of work and doing the structural engineering needed to inform the process. the board will approve a recommendation in the legislative change following sequence certification. to date they have only endorsed proposals because the critical

piece is not needed. in order to deliver the plan that we have together, we have a comprehensive task force. this is very much based on our experience in december 2009 and may of 2010. it takes every division within the agency to make that restructuring successful. moving forward, we want to tackle remaining policy issues. not shown are the muni accessible services. they are a key part of the process that were left off the slide, which i apologize for. we work on providing direct support needed for this project, including identifying capital project managers and program managers for this work. so, the next key steps are the beginning of the environmental

review, conducting community outreach, talking to people about the implementation strategy, and beginning summer employed on travel time reduction proposals and changes. assigning staff and regularly meeting up with the task force. doing environmental engineering and providing quarterly updates on this work. that concludes my presentation and i am happy to answer any questions. supervisor avalos: thank you. i would love to, prior to any presentation in district 11, to get briefed and go out at the same time. but that could be helpful. >> it would be wonderful. supervisor avalos: we can drill down into district 11 what will happen and what is taking part with my staff. thank you. we can open this up for public comment.

thank you for your presentation. for your work on this. making changes. >> supervisors, on 9l ltd., i would like some of the stops on market to be eliminated. maybe there could be one additional stops at 22nd street, another at 24th street. oftentimes if someone is very sick and 24th street, they have to come back to the general hospital and it does not insure any compassion on the part of the city. as you know, supervisors, this is like a conceptual plan. conceptual plans are like a dream.

even wake up and they can be your worst nightmare. in order to lessen the nightmare, we need to see a plan. a short-term plan and long term plan with money. right now what is hindering us, to be very realistic, as the economy. five or six fte's have been created. give them $80,000. that way you can see that everyone means well. you have created program managers, seven or eight fte's, which is like $1.5 million. supervisors, we need to pay attention to those kinds of details. you know what is happening on the national level. we are lucky because we have a

mixed economy. soon, people will be coming here and asking you to have mandatory cuts on big scales. so that we can have some effective government. thank you very much. [tone] supervisor avalos: next speaker, please. >> thank you, supervisors. tep is one of the best things that's has been produced. this evening all of the parking meters will be filled with folks going to the ball game. they will pay nothing at the park after 6:00 p.m. we should capture that revenue. there is a funding gap here and i want to encourage may be the mayor to have further political ambitions, as i understand that.

let's implement congestion pricing. the projection is that $60 million to $80 million could be produced from congestion pricing. things like small businesses are fighting with an evening outbound. might keep folks later in the hours. they might spend more having dinner and so on. with the america's cup coming, these time lends scare me. 200,000 folks will be making their way along the waterfront soon. i have spoken with developers that are dusting off the plans for new developments. another 2500 housing units. the transit center district plan plans to ups on 1,000 feet of office buildings. 2020 is a long ways away. i wanted to say that this is a

very wonderful project and i look forward to seeing it implemented. thank you. >> good afternoon. but i am a spokesperson for the [unintelligible] alliance and a muni writer for several decades. when i was in the media program to give a report of the human rights commission, i did not expect so many calls about muni, services, and the clipper program. another senior kept asking the chinese driver to ask to remind him where to get off. i feel that the clipper program was extremely badly planned. even one of the members of the ambassador program that i talked about earlier told me that there

had been a lot of concerns about clipper. would you believe those applications are still in english only? let me put it down here, this is all in english. how can we provide passenger content for the people? considering the number of non- limited english writers, how can a city still pay hundreds of thousands of dollars to staff that do not take in the input of passengers and provide appropriate services? people that earn over $100,000, up their services they are providing viable services to

residents. thank you. supervisor avalos: thank you. >> good afternoon. i have heard the presentation and tdp before and i get more disturbed when i hear the second time. about it being will be in english, not chinese and spanish as planned. more than that -- not more than that, but in addition the most marketable item that muni has is its express bus. you cannot drive faster than an express bus, but they are so stingy with them. limited is included in this, and i guess that is the kind of compromise we have to deal with. if we had ltd's and the stops

that we have now, there would be no need for considering eliminating a number of stops. many elderly disabled mothers with young children are not able to walk an extra block or two to get to a bus. i think that we should look towards making both parties at the. i live on 44th avenue and it takes me an hour to get anywhere on the bus. if there was a limited near there, it would be much easier. if muni could somehow understand community and put a little better, they might listen to some of the things they have said. i have said these things before. i suggest they go to the neighborhood and best for their stops for the limited. i do not believe that it should

cost more money. you could alternate. you could have some muni stops and some limited stops. everyone should be having some of their needs met. supervisor avalos: thank you. anything from the public? anyone that would like to comment? seeing no one, we will close public comment. thank you for your presentation and your work. i do want to reach out. we could have further briefings about proposals in my office could be helpful in the of reach. i think that that was a step that was not as quite as robust, i thought, as it could have been, especially, but mostly regarding the chinese speaking community, who were a bit

alarmed by the proposed changes that were years in the making. i could be helpful in that. also to help translate the concerns of the public back to the mta. i will be glad to help. ok. this is our last item. continued to the call of the chair. after this, we will be adjourned. thank you.

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supervisor chu: kim andi am joiy supervisor kim and supervisor wiener. we will be joined by supervisor chiu later. >> if you wish to speak during public comment, please present a speaker card. supervisor chu: colleagues, before we call the items, can we have a motion to set excuse supervisor mirkarimi?

without objection? thank you. and item number one? >> item number one, a hearing to review the joint report, three- year budget projection for general fund supported operations fiscal year 2011-2012 through fiscal year 2013-2014. supervisor chu: thank you. >> good afternoon, ben rosenfe ld, controller. all three budget office's produces on an annual basis. we all get together at this time and repair a consensus projection going forward of the city's finances. we issued the report last week. i have copies of the report on the desk behind me, as well as

copies of the power point presentation we will talk through briefly today. to start with, at the highest level, looking ahead in the general fund, we see an project estimates of $306 million shortfall in the coming fiscal year, followed by growing deficits in the years beyond, $480 million in fiscal year 2015, but and higher thereafter. the number for the coming year, " $306 million, is down modestly from what the mayor had issued previously. there is some improvement, but in future years, this ongoing and balance between projected revenues and expenditures is cause for concern.

like any report, this relies upon projections, assumptions, and our estimates in early years will be more precise than in future years. it in all cases, there are policy choices that the mayor and board will make to reconcile these budgets to change these numbers, which the charter requires us to prepare a balanced budget each year. some of the key assumptions, first, generally speaking, the report projects a modest recovery in our local economic picture over this three-year horizon. we have hit bottom and our local economy and have begun to see some modest growth. to the extent that the recovery is more robust and faster than what we are assuming, these numbers will improve. to the extent we see additional said the downturn in the later years, the projections will material affect the numbers

down. the report also assumes constant service levels. this is based upon the current year budget. it assumes no major changes to service levels, number of employees, nonprofits, and the like. obviously, as the budget is balanced, that will affect future numbers. the report assumes no change and the labor contracts, and the open labor contracts, medicines cpi. there negotiated -- it assumes the cpi. they are negotiated on a regular basis, and the ultimate outcome of the negotiations are known. lastly, the one that has the potential to change the most is the assumption regarding the state budget. the state of california funds just over 15% of the general fund budget and we are heavily reliant on state funding, in particular for health and human services and county jail

functions. the ultimate impact of the state's budget is not known to us, given the fact the state has yet to not adopt a budget for the coming year. we're estimating a loss for the state, which is a preliminary estimate. this puts revenues and use is in big buckets and tries to tease out some of the trends that we see. on the revenue side, we see an project growth every year of the 3 a-year horizon. and more robust growth of $102 million the year after that. we're seeing revenue growth in the picture. however, this slide illustrates we also project expenditure pressures to outstrip available revenues during this time.

$344 million in estimated cost increases, an additional $208 million the year after, $264 million the year after that. every year, we see expenditures growing in order of magnitude greater than revenue growth. within the expenditure side, it is a mixture of things driving that. it is a mixture of employee- related costs, wages and benefits. city-wide expenditure pressures on capital, debt, and other city-wide adjustments, at a whole host of other department alisa specific details which are outlined it -- departmentally specific details which are outlined letter. supervisor chu: if we see no change in the assumptions. to be true and are no changes on the expense side, we expect deficits the next three years, basically. >> yes, yes.

if you take that picture and display it graphically, which is what we project as revenue growth reverses' expenditure increase and how that drives the numbers, this is a depiction of that. geographically, modest revenue growth in each year of the projection, but expenditure growth of a much greater magnitude. we always have questions about what effect a more robust recovery would be on the numbers. i think it is fair to say that at least our office cannot imagine a recovery where revenue growth in any year of this projection would be at the level of projected expenditure increases. it will not be a shortfall that we grow our way out of, absent policy changes. the projections here differ somewhat from our expectations following the dot com bust, where we saw today v-shaped

downturn, we lost a revenue -- a lot of revenue quickly and we gained revenue quickly as well. at the moment, we're looking at a more gradual, long-term recovery. digging through component pieces, in terms of fund balance and reserves the coming fiscal year, where roughly even, compared with the current year budget. that is the result of our projected year-end fund balance for this current fiscal year improving slightly compared with what was assumed. there is a positive $10 million gain, offset by $12.3 million in losses because the rainy day reserve will the longer be available in the coming year, given the revenue growth. we're not protecting we would be in the charter range that allows a withdrawal of any reserve, as we had assumed in the current

fiscal year budget. these numbers will be updated. at our office will provide an update for the mayor and the board at the end of may for the current imbalance of the current fiscal year and that will change these numbers. in terms of the annual the recurring revenues, it is about $37 million of growth in the coming fiscal year, driven heavily by property-tax improvement and property transfer tax improvement, although there is much more detail in the report. on transfer tax, it was approved an increase in the transfer tax rate on large commercial transactions. over 10 years, we estimated that would bring in approximately $30 million per year, although it is highly cyclical. that was not to send in the

current year budget and we see improvement and transfer tax because of the rate increase and also because we have begun to see a bit of a pickup in commercial real estate market and san francisco. we're seeing large properties turnover and change hands for the first time in a couple years. the other bright spot on the revenue side is the property tax base. the property taxes are the largest source of revenue in the general fund, just over $1 billion. unlike any other county in the state, san francisco has not experienced a decline and our property tax revenue stream, which is one of the things that has been holding us up. with continued to see and assumed a modest growth in property tax going forward. that is offset by the likelihood we will begin to pay out and need to set aside money to pay out appeals that have come in and we have talked about before

from property owners for changes in assessed value. those are the two good pieces of revenue news looking forward. on the negative side, we have the losses of two major time- limited revenues that were used to balance the career budget. as we are all aware, the stimulus bill approved by congress and president several years ago has expired. at that provide it is significant money to the general fund to balance the budget, $47 million. those funds will not be available to us next year. they expire and we have to absorb that loss. at the bottom of this page, there is the hospital fee. we talked about this a lot during last year's budget process. $88 million of this one time, time-limited revenue was assumed that the current year budget, and that program is scheduled to

expire. we had it to major losses of revenue, one from the state, one from the federal, offsetting the majority of the good news we're seeing here and our local revenue picture. in the middle of the page, there is the conversations about the state again, these projections assume $30 billion of losses and the ultimate impact from the state may well be unknown to us. until well after we adopt a budget luckily. supervisor wiener: could you talk about that state assumption? i know that in years past we have underestimated, sometimes we overestimate. what is the assumption? >> it is a very rough guess, based upon the amount the city set aside in the current fiscal year. we assumed a $30 million of state losses in the current fiscal year. we assumed the same amount next year. looking ahead to next year, it

seems likely we will have much deeper reductions from the state than we have in recent years. the state has been heavily relying on borrowing and other short-term solutions to bring their own budget into alignment, and seems much more appetite at the state to make hard decisions that will result in positive things for the state going forward, which will create much more negative consequences for those who rely on state funding, and that includes us. supervisor wiener: could you even gas and magnitude of what would happen if we had to do all cuts state budget as opposed to some revenue state budget? >> no one has seen what in all cuts state budget looks like it. the government will propose in early may his revised budget and we'll have a better sense of the governor's thinking then. even order of