to the package of the ballot measures this is continuing to deposit into our citywide reserve citywide operating costs are equipment and other tools and departmental costs is a summary category for various changes in the department like opening the new public safety building and the 19 new san francisco general hospital and funding for the mta as the new central subway comes online and our public safety hiring so we're in a very strong economic time but we are continuing to see our

expenditures grow more quickly than the revenues are growing our fiscal strategy is really you're not to cut programs and services but to grow at a slower rate instead of growing the cost of government by 23 percent grow at 18 percent that is closer to cip and identify the revenues solutions that what about part of that package so we propose in the plan a number of fiscal strategies to solve the gaps in every year including reviewing capital spending and restructuring some of the debt and generating savings and manage the benefit costs the contract we negotiate with the employees as well as

the good work both the retirement and health services to manage city costs as they generate returns in the pension system we assume some new ref revenue over and above what is in the plan as a portion of the solving the gap here managing our non-personnel costs this is again not making reductions but growing more slowly than the base case it assumes inflation and slightly less increase and then looking at to departments for part of the solution this is that line reflects if we were to assume about a one percent solution

from departments in each of the last 4 years of the plan what we're trying to do t is come up with a balanced approach to solving the gap relying on revenues for part of it and also looking at the departments one of the one time spending categories and working hard to insure our employee costs are affordable so we think we've put forwards an approach that maintenance similar to the 5 year financial plan but we think this is a reasonable and balanced approach of course, with any projection there's uncertainty and all sorts of factors that effect this we are kind of watching closely

how the city and population grows that's an important thing that the city needs to be paying attention as population grows and demands for services are likely to grow those increased demand for services are not in the projection here poor to the degree new budgetary commitments are made by the board or mayor those will change it out look and we're monitoring the state and federal government the governor's proposed budget has effects on the city we're watching that but won't have final information revised physician in may and finally in june was happens with the affordable health care act and the federal excise tax the tax

an cadillac health plans which some of our health plans fall into as supervisor farrell is aware two other notes to highlight to the degree that the mayor or the board or departments so the departments overspend their appropriations or should there be supplemental proimgsdz and finally if and when the economy changes that will have a significant impact on the forecast so for that reason we decided to include a recession scenario. >> yes ms. howard genetically we're still the same things how do the budget look on a tax basis.

>> we're expecting about probably about $6 million to the good on a one-time basis so there's part of governs plan to repay the wall of debt and counties are one the entities to which we owe money we'll benefit modesty from that at the same time there are changes to the workers' compensation that costs us $3 million and in addition we've expecting that the gas tax is going to decline by $8 million and that's largely due to the low gas prices we're all experiencing the combination of that plus reduced gas sales are less revenue the gas tax is a source of benefits for the streetsy paving program in the city.

>> thank you. >> so i've use this slide a lot i can't remember if i've shown it to you before but i may have this slide is really trying to express visually kind of what is happened in the past related to the expansions and recreations we can draw our conclusion since 19 hundred you know the long time economic expansion was one hundred and 20 months during the clinton administration of administration in the 90s and today, we're anothers 69 months we're well into the economic recovery it seems possible certainly

within the next 5 years the economy will change significantly how it is performing today so the controller's office the budget analyst and our office really looked at what might happen if we experienced a recession like the last two recessions to the.org 9/11 and the international financial banking crisis we've experienced most recently in 2008, and 9 what we see is that if we were to experience a recession like the combination or combine of those two the average over a 3 year peddler almost a billion dollars in revenue all the revenue growth this is showing you the

top line which is in the light gray showing you our revenue projects projection that is assumed in the financial plan and the dark gray is showing you in a recession what we think will happen with the revenue so as you can see the revenue increases we're assuming a recession happening you know in 2017 and this almost immediately we lose all the growth tb the first two years and have negative growth we lose by the third year out we still are no where close to recovery where we otherwise would have been if this were to happen the bottom trying to show you the impacts in terms of the deficit from the

last year to $420 million to over $820 million in one year i think the other thing that's important to reminding remember a couple of things happen; right? if a recession were to happen what we experience in the last several recreations our most volatile revenues dry up to transportation dries up ♪ the lasso 809 transportation our taxes came in half of projected they were budgeted about one hundred and 20 or $30 million in that year today their budgeted at $230 million so our reliance on the volatile services is greater today than the last downturn

we had an update with through the fax process and number of of him advisors came and talked to us hair bullish think it will keep going i have anxiety about it mostly because with no warning it's a stop so that happens but the other thing that happens is that the people who rely on the city services need over and over those services more than ever in a down turn so to sustain our health and safety net is greater than a time we're in right now 3.8 percent growth to dealing

with that is really important so we in the plan also identify some changes is to the fiscal strategies that will have to take place if we did, in fact experience a recession resources are important over the 3 years $250 million to help mitigate the impact of a recession on the city's budgetary shortfalls but at the same time revenue becomes a smaller part of balancing plan that is hard to assume additional revenue growth in an economic downturn fiscal strategies we've talked about assumes slower growth we believe in a recession we'll need to be able to afford no-growth or reduce levels of

services in particular we would expect to rely heavily on one time spending reductions like the it equipment those sorts of things you know i think this is important to not be overly caution here but i think this is important 80 he think about the good and bad times we're not in a bad time but i want to highlight some of the potential risks given that the economy is performing so strongly so it's the highlight year financial plan i can take questions on the 5 year now >> thank you, ms. howard. >> supervisor tang. >> thank you katie wanted to say i don't have a question i'm

glad this time you've included the recession and you would be doing planning for the potential downturn that can happen anytime so i look forward to the updated nukes in the coming three weeks i want to thank you for that. >> thank you supervisor tang colleagues, any other questions at this time. >> okay. >> i'll continue on budget instructions. >> so as i mentioned at the beginning of my presentation the mayor is having the budget instructions at the beginning of september the gaps is $16 million and $88 million over the next two years about a hundred million dollars over the next 2 year period those are - so $5.9 million it

the lowest deficit in 15 years that's as far back as i could find records that's what it is and signal to me and all of us where we are economically as a result we requested contingencies cuts that were not taken in 2015-2016 we asked the departments for no reductions we asked them to absorb revenue they might experience but all of their base costs increases will be covered the pole increases you know work order increases those sorts of things and this is also the first time in 15 years there's been no requested reductions from the departments

in the first year second year we requested the departments proposed on reductions or revenues equal to one percent that's $18 million citywide and we'll be looking at closely at the proposals to - and the mayor will are review them to see if their appropriate to include in the budget this mayor, i haven't worked for a mayor yet that will take an cross the board up to the time cut but look at options and be able to make discussions about those choices from the policy point of view the mayor is continuing to focus on his shared prosperity that is included as part of his budget instruction to ask the departments his proposals focus on affordability and shared

prosperity but address fiscal sustainability for the city and government efficiency but address government efficiency and customer service and helps to address the population growth we're experiencing other instructions are similar to what you've seen before in terms of focusing on the departments for the direct impacts to the public we continued to ask the departments to review tare fees to look at things that are not appraisement appropriate to charge and engage with the stakeholders and work there the processes with the public so we kind of are starting our review in the mayor's office of department proposals the blue box is where we are in the

budget so we issued the budget instructions in november the governor put out the proposal and the department sent their budget on february 23rd this month we are updating the 5 year financial plan which is the joint report and we're beginning our conversations with various budget stakeholder and starting our budget process in my you'll all hear the controllers 9 month update our financial look at where we are that gives us a sense of how much additional unspent money might be available whether revenue growth and expenditures savings to help balance that and on june 1st, the mayor will give

a balanced budget to the board we're early in the process but the departments have a lot of work so for you'll be hearing from them from this committee and they'll welcome the opportunity to 0 meet you with individually to sharing their ideas i'll be happy to answer any questions. >> thank you, ms. howard colleagues, any questions for ms. howard. >> supervisor tang. >> going back to slide 16 in terms of our potential fiscal strategies the $250 million in terms of the reserves is that just the assumption of what in terms of our charter we're supposed to be setting aside or additional amazes to put aside. >> there are a couple of pieces that flow in terms of a down

turn we can draw on our rainy day fund and our budget stabilization reserve and the ability to reset our general fund revenue to a lower baseline that are and so those 3 things forgot a generate $450 million over the recession if you're interested in the table on the 5 year plan i can point this out to you. >> colleagues, any further questions for ms. howard thanks very much for being here at this time kansas city public improvement advisory committee is there any member of the public who wishes to speak seeing none, public comment is closed. so colleagues this is the one substance i have today thank

you, ms. howard for being here we'll spend this time of march getting oriented to our new members as we move into the budget season we'll be spending april and may for the counterpart hearing and we will be looking at the other departments and so i know the mayor with ms. howard will be going to the supervisorial district to talk to people as we look at the budget thanks everyone for getting together and this is the first hearing we'll continue with the hearings with that can i have a motion to file item number one. >> so moved. >> supervisor katie tang has made a motion we'll take that without objection. madam clerk can i tall call item

2. >> budget updates from the mayor and the budget analysts including the balanced shaurlz. >> this an item we should have called one and two together so we can slotted in any items that are relevant to our budget over the next few months we have no substantive items kansas city public improvement advisory committee seeing none, public comment is closed what we have this objection. >> okay madam clerk, any other business before this committee? >> in mr. chair. >> thank you madam clerk we're adjourned

>> the program will be continued by the remarks of our special guests. first of all the honorable mayor of san francisco. please welcome our mayor. [applause] >> thank you very much. happy luna new year everyone. [applause] it's my pleasure again to join our senator leno, our supervisors kim and scott wiener and the entire committee that has worked so hard to put on

this wonderful, wonderful festival for our entire city. i just love this time of the year. the year of the ram this year is going to be about artistry, about coming together supporting each other. i want to say thank you very much to the festival volunteer community and the vietnamese community and economic development center. they have been wonderful in putting this on and now that we're revitalizing market street there is a connection of the improvements of the area and connected up with market street and this is a wonderful celebration that we have it here at the center of our united nations plaza. i want to congratulate all of the store front owners here the small businesses here for working together with us. we have been putting a lot of emphasis on our market street as of late and our investment in neighborhoods and

i hope that the small business owners along that corridor have really appreciated the work we're doing together. things are always improving and look at the wonderful crowds that you have coming out today so we join you in this festival. it's now the 19th tech festival celebration in our city. we congratulate and continue wanting to work very closely with the vietnamese community. [speaking foreign language] >> thank you. [speaking foreign language]

[applause] >> thank you mayor. thank you so much. [speaking foreign language]