capital plan. there's been a lot of steps additionally to adopt responsible fiscal policies. in 2009 there was a ballot measure put on by the controller's office and approved by the voters to increase the city's reserves and adopt a new reserve fund as well as limiting one time sources to balance the budget and codifying debt policies that are responsible in terms of time debt growth to a responsible level. >> the the 5-year financial plan we put out in december covers your fiscal year 1920. the goal generally of the of the 5-year plan is to highlight the key financial issues going on in the city and to set a road map that's forward thinking and identifying

revenues and expenditures that we expect over the next 5 years as well as monitoring the process on the deficit and develop multiyear strategies to kind of reduce volatility in the city's budget process and anticipate and plan for some, for issues. additionally we've moved the publication to the fall normally we publish in march but as you know i mentioned earlier we published in december of this year to have a more thoughtful planning process for the 5 years and in terms of of what what can be found in the plan we publish it every 2 years it's a joint report with the city controller's office. so the high level take away is that, you know, what you are seeing in front of you is a summary of the projected budgetary surplus or deficit you will see

it's a projected deficit for the 5 years and in fiscal year 20 and in fiscal year 2017 it's a cumulative shortfall i'll note that the 15.9 million is the lowest shortfall at least in the last 15 years but do know it's a projected shortfall. >> so what you will see here the bottom gray line is our projected growth in general fund revenues. however, the top line is the projected growth in expenditures and you will see growth in expenditures is still expected to outpace growth in general fund reserves and that's why we're projecting a deficit we we don't necessarily have a revenue problem as you can see they are

growing at a strong pace but expenditures are growing even faster and that's a challenge in balancing the budget and some of the driving factors including salary and benefits of recently negotiated labor agreements, you know, in november there were a number of ballot measures that increased baselines in reserves and a number of city-wide operating costs including capital as well as equipment and some of the other assumptions includes departmental costs like the opening of the new public safety building and the new general hospital as well as public safety hiring plan. >> so charter mandates in the in the 5-year plan we also have to present fiscal strategies to balance the projected deficit so this chart is showing you or attempting to show you -- i'm sorry it's such small font but we're taking a balanced approach

growing at a slower rate so curbing growth and also increasing revenues doing it from both ends to present a balanced budget. expenditures over the the 5-year period are expected to average about 23 percent over the over the 5 years so our 5-year financial plan proposes a reduction to to about 18 18 percent slower growth in cpi and if you want to nitty-gritty details you are more than welcome to dive in on the city's website and increasing revenues to 18 percent to present a balanced budget. as i mentioned earlier this is the first time the the 5-year plan we're presenting a recession scenario and again

it's small i apologize but what is your seeing here is the average length between downturns since 1900. and so the black dotted line that's vertical down the middle represents the average and so the average length of time between recessions has been about 46 months as represented by that dotted line and as you will see the top bar from july 2009 to to october 2014 represents our current economic expansion and as of now that's about 64 months of economic expansion and the bar to the right of that represents if we were to continue to continue without a downturn through the term of the of the 5-year plan, that would be un precedented 132 months of economic expansion without a downturn that would be the first time in 115 years that we would have an expansion that long. so a downturn at some point over the next 5 years could be very likely and as

part of as part of as part of the financial planning we wanted to look at planning mechanisms and ways that we could help plan for a possible downturn. and so this chart is representing what we might expect to see just doing modelling of what a drop in revenue might look like in a recession scenario so we took the average decline in revenue and increase in pension contributions that occur have you that occur as a result of a downturn and averaged the most recent recession as well as the.com the dot com bust and we'd begin to feel the effects in fiscal year 17-18 and for those 3 years 18 through 20 we'd have a 936 $936 million

reduction in revenues. it would also represent a projected increase in the projected deficits at the bottom of that that chart there. so it's a potential change to fiscal solutions in light of a recession that we proposed and the the 5-year plan will be much more reliant on reserves to balance the budget and revenue obviously will be a smaller part of the balancing plan there there will be significant potential reductions in one time spending like capital equipment and it as opposed to continued increase in the growth in funding those. >> this is just a refresher. this is just thinking about the budget cycle coming up now and the budget instructions we gave to departments in december and reminding you for fiscal year

15-16 this is for 15 through 17 for the the 2-year budging and we're projecting a 15.9 a $15.9 million shortfall. so with that, that is informing the budget instructions that we gave to the general fund department so a lot of general fund departments were very excited to see in fiscal year 16 departments were not requested to to make cuts to their revenues and in year 17 we've proposed ongoing reductions in revenues equal to to 1 percent of the adjusted support of the departments. and next should be a timeline of the budget process. we gave

instructions in december departments you will see on on february 23rd submitted there proposed budgets. i would like to say it's the beginning of a conversation that goes on for a number of months between departments and the mayor's office and plenty of opportunities for public input and hearings and things that happen at the board and our office proposes a balanced budget in june and in july the budget is considered by the board of supervisors with that i'll answer any questions about the presentation if you have them. >> thank you kelly. you know, before today we had heard you have done about 15 to 20 of these presentations to different commissions and the board of supervisors and it really shows. >> this is my first one. >> your first? it was phenomenonal. >> thank you. >> colleagues? >> commissioner wald.

>> it was a terrific presentation thank you so much for coming here and like our president i would not have guessed it was your first one but i do have a question. >> yes. >> the instructions that you referred to. >> uh-huh. >> for the general fund departments. >> uh-huh. >> the department of the environment is not a general fund department and did the mayor give any special instructions for such departments? >> there aren't any reduction targets like general departments they are expected to present a balanced budget. there are general kind of themes to the budget that the mayor kind of emphasized and i have those -- one second. kind of prioritizing you know fiscal sustainability in government efficiency and prioritizing government response as government responsiveness to citizens and shared prosperity

are important and also understanding and knowing population growth as our city is expanding. >> thank you. >> uh-huh. >> and, you know, kelly you would be happy to know that we sat down with our director and the operations committee to look at the budget for the department with our chair of the committee commissioner king here found ourselves reading through the shared prosperity agenda and really took cues and talking about sustainability and solutions to climate change and benefits diverse communities and solar and electric vehicles for everyone and neighborhoods and businesses. we thought about that a that a lot and i think

there are exciting ideas. i think the mayor said to get to zero waste we're going to have to have broader participation from diverse communities so how we support families at the department and the mayor's priorities as you mentioned and also make sure to address components on how we operate and i think we we got some exciting ideas we're really excited about it when it comes to zero waste and he's been really passionate about and we know the financial picture and you have given it to us in a very stark and clear sense but we definitely look forward to i think for us we'd love to become a general fund department again like 10 years ago and we're confident about director raphael and jennifer and folks if if you haven't

met already you will hopefully get to know and they are great we have put a lot of faith in them to to help deliver the values and we see the mayor care about. >> i look forward to working with your staff on those ideas. >> commissioner king. >> i'd like to echo the president's statement. part of our goal here is the equitable.

>> we're the city that's going to teach other cities. if we are all going to live in one place and it seems like this is the trend to do we have to do it sustainably we have to do it this way. so if that's the case, we'll be the first to show you how to do it and then you can copy and that's worth investing in and that's a value that that you can tell the rest of san francisco is worth general fund money for. >> uh-huh. >> thank you commissioner. >> colleagues? director raphael before we go to public comment, any thoughts? >> kelly, thank you and i appreciate the fact that you ended and read to us the instructions that we did get from the mayor because it was a very interesting point in the

budget discussion where he said all right this is a great time we're about 15.9 million while it's a little startling to the general citizen, it's the lowest in 15 years we are in a healthy position this year and i think the thing that impressed me the most what the mayor said next was -- so that means you have to as department heads, deliver even more value for the buck, that you need to show people how with consistent resources that aren't being cut, you are going to do a better job of delivering services and a better job of being responsive and he was very passionate when he gave that instruction to all of the department heads in the room so these three areas i want you to keep in mind when you think about our budget the fiscal sustainability number one and

the increase in responsiveness number 2 and shared responsibility and they are also weaved into the discussion which i'll talk about a little bit later about the general fund so we'll come back to that because we took your comments and suggestions to heart and had a very very productive discussion so after we present our budget we'll sort of end on that note and kelly was in the room. she heard our discussion and i appreciate your voice of support, too. >> and as you know kate is amazing. the city is in good hands with kate howard as the mayor's budget director. she is amazing. other comments on the presentation? thoughts? seeing no speakers, public comment is closed. any final

comments before we go we go to the next item? all right. thank you kelly.