tional aged youth and eeben more for seniors for delivered grocery and other programs and hope we'll look at in the next few weekz. i also want to say the crisis for artdest mereies the crisis for non profit in the city and hope to look that different funding mechanisms in the budget and enhance them. i wanted to ask about the passage of prop c, childrens fund and public education inretchment fund. i wonder-and theectionpansion of preschool for all and additional affschool program, what are those are on top of what we passed for prop c as voters acted last november? >> thank you for the question for vieer mar. let me clarify, which of these

funds are these funds included in the fund and p fund and which are gineral fund resources? >> i know that the percentage of the set aside for the childrens fund increased so there are increased funds and voters really approved those, i wonder what in aadditional we approved with prop c is added into some of these different buckets? >> i would have look at it more clear claesly to give a exact answer, but the broad answer is generally these items that are highliteed here whether it is the after school investments or summer programming for all or the expansion of preschool for all to all 4 year olds or the acceleration of that, those are all investment made as a result of the passage of prop c so they don't reflect further investments beyond

those new investments required for prop c >> it looks like the items in the children and youth are quantifyed by 5 million dollars for 820 new after school programs and really good quantification. i want to ask if you can help me understand and quantify the 5 classes of police academies or the cost of the 1800 body cameras? >> sure, the cost of the 5 academy classes is approximately 11 million dollars >> okay, and you can see that i high pm liteed that >> there is 11.6 million on the previous slide plus 11 million the following year so that is all the police academy >> that is public safety hiring and police staffy, for the body camera? >> the body cameras are 3

million dollars in the next of the 2 years >> 3 million per year >> that's right >> supervisor yee >> thank you mr. howard for your presentation and want to thank the mayor for relatively positive budget offer. there is a lot of good things about it. of course we are trying to address housing. maybe we still fall short of what we were trying to do, but it is step in the right direction. maybe in our process we can assist that a little bit. i'm happy about the seniors-advocateing for senior services for the last few years and see it in the budget like this t is a good thing. also the arts

community-the funding for arts was a pleasant addition to the budget because i know the art community is advocateing and asking for more resources to keep our culture up in san francisco. the parks piece, when it talks about the park parole straf, i'm not against it, but once upon a time or recreation facilities was really staffed by a lot more people and it was pretty-anybody that grew up in san francisco knows-what those either the club houses or reck centers meant to the community. it was a hang out. i appreciate the fact reck and park is truing to do things in the last few years when it was cut in leasing out their properties and i

think we need to balance that out. we want to get services there and income, but what doesn't happen when you lease it out, it isn't a community center, so i would like to see-if we were to staff sometimes mt club houses in the week days and weekends, that in itself will help a lot in terms of park safety. just to have people there. it is a balance of are we talking an a continue of increasing park, parole staff versus no increase in program staff? program staff can play the same function as the-not in the evening of course-i think supervisor mar sort of has a good point

with the children type services. it is great to see the goal of trying to reduce the preschool for all to a zero waiting list. of course there are other neesds in regards to childcare especially for low income. there is literally several thousand on the waiting list for childcare that are from low income families that have kids from 0-5 sw would like to see the city-actually put more investment in our children in general, not just ciledcare. it is something we have done a okay job with in turnls of childrens fund and [inaudible] inretchment fund and supporting our young ones, but those are things that we passed in the

legislation like other issues in the city we need to invest beyond what we already have on the books. appreciate if we can look into that. >> okay, thank you have supervisor yee. okay, thank you mrs. howard. up next we are going to have ben rosen field to do the controllers revenue record for item number 2. >> good afternoon ben reason field city controllers. as you aware the charter requires the office to prepare a estimate and presentation for the mublic for our feelings for our estimate for the [inaudible] each year we produce the revenue letter and we published that about a week ago and available on the website and have copies here. i will hit a couple

highlites from that report today. in general the budget before you proposed by the mayor in our view is reasonable and contains expectations for continued, strong but lowing revenue growth during the 2 year period of the budget. there racouple key revenue risks we highlight that need monitoring during the 2 year period. the pace of the economic recovery and of in particular commercial real estate related to taxes is continued to be a risk area frathe city as we work through this 2 year period. the phase in a very significant change the business tax system, the gross receipts tax creates administrative and [inaudible] lastly state revenue associate would the affordable care act is a issue we'll continue to

monitor. as mr. howard indicated the budget shows growth. 5 percent growth in 15, 16 with stronger percentage growth rates with the general funds. just under 8 percent growth year to year in the general fund in the first year of the budget, slowing in the second year again. looking under the hood at am major taxes that make up the general fund budget and of course we have a lot of different sourceoffs fundsing that make up the general fund but these come as a result of economic activity in san francisco. these are growth rates assume said in the proposed budget versus those projected in the coming year. you see for the mast vast majority we project in the 2 years tax revenue growth that exceeds inflation. there are a couple extenshzs yacan

highlite. a continuation but a slow down somewhat from the really extraordinary tax receive new growth we have seen in the last couple years. 7.8 percent growth in hotel tax in the budget year over appreciately 5 percent growth in sales tax, well above inflation projected in the budget year and lesser but still significant growth in business tax and property tax projected in the budge 89. the extension to that are utility user taxes where we have seen changes. in the budget we project a small decline in utility taxes this is because of a weakness in natural tax. the tax is on the cost of the good to residence and predominantly business in the city, the tax revenue declines. while wree projecting very near historic peek transfer tax levels we project the current year is likely to be the peek for

transfer taxes. we do project modest declines in both of the next 2 years of transfer tax. this highlites-other than property taxes-general fund local tax revenue and what happened with them over the last decades. you can see on this chart in 910, we hit oat owe or bottom following the recession in 2008. this chart also illustrates the extraordinary lovel growth we have seen since then. by 1011 we are at historic peek frz each of the taxes accept for transfer tax and since then each year is a new record peek for these 3 significant local tax revenue. the projection continues that through the next 2 years. business tax.

hotel tax continued strenge and we are projecting decline in [inaudible] those levels still remain well above historic averages. transfer tax i should say is the most ditch cult to project k& the most voltile and driven by what is going on in the commercial real estate. we are concerned rising interest rates will have on the commercial tax in the city. in the revenue letter we also hit on and review whether inmayors budget is in compliance with ballot measures that create spending requirements or dedication rerequirements thrmpt is a great deal of detail in the report itself, but here is a couple hilites. supervisor mar and yee, per your question how the budget fund

and the new baseline is established in prop c, the budget grows in the property tax and beyond that it establishes a new base -general fund support in excess of fundsing levels in the 2 years. for the children baseline property, which is the old baseline the proposed expenditures exceed the base by 2.2 million in the budget year and for the [inaudible] it is appreciately 1.6 million above the baseline. the voters osadopted chaimpgs to how mta baseline is calculated this past year most significantly including a ret row active increase to the baseline based upon pop

yolgz growth in the past 10 years. we calculate that population growth 25.9 million in support to mta. the budget does fund that increase. we have reviewed as well the minimal police staffing levels and the minimum staffing level is likely not met in the first year, we believe it is met in the second year of the budget and that is consistent with mrs. howard presentation >> supervisor mar >> can you summarize briefly the childrens fund set aside and what are the other set asides that exist within our budget? just very briefly. >> in their entirety? children specific? >> other set asides besides the childrens fund >> sure, we do highlite

these in the report on page 21 for those that have gotten that far into the revenue letter. we have a flb of different set asides in the general fund adopt bide the voters. the mta sed aside oof a portion of general fund revenue equivalent to amount of parking tax revenue. we vabaseline for libraries in the city, a set of different childrens services baselines, a childrens fund which is a dedication of property tax squz above and beyond that we have these 2 baselines now in the general fund, one for services defined in the charter for 0-18 year oldss and now one for certain disconducted transitional age youth that are older than 18. we have a set aside for schools in the city and preschool for all. we have a set aside for open space.

we have a set aside for housing, the housing trust fund and other smaller ones. the city service auditor, which is function in my office has a baseline as dus enema nisple semphony and the hsa and others >> that is a lot of set asides j and a growing number. at this time of year while these dedications protect these services it does inhibit these fund in front of you >> we do comment and provide information on inreport of the level of reserves in the budget. this is a highlite of some of the general fund reserves and again in the report itself we have greater detail, but this table shows the starting balance in the reserve we expect at the end of this fiscal year and

depause squts with doll and the ending balance. you can see we start the period, we project 311 million dollars in these different reserves. pro dominately those are held for adopted policy by the voters or the board are being held for future downturns. you can see in the budget we do see deposits are growth in the jenroom fund itself growing byphony.8 million and 12 million after and ending the period at 85 million. that is consist wnt the board adopted financial policy that has this growing until it equals 3 percent of jenroom revenues. the other deposit in the budget year is the budget stabilization reserve and this reserve is driven in part by what is going on with transfer tax and we do expect given our transfer trax projection tooz be over the 5 year average for transfer

taxes which triggers 75 percent withdrawal in the first of the 2 years to the stabilization reserve. no such deposit in the second year. on the [inaudible] side the only significant reserve that is proposed for draw in the proposed budget before you is approximately 6.2 million in withdrawals from the reck and park savings reserve. this is a reserve that has been created by the voters that retains a certain amount of savings or net receive new. 2/3 of that reserve is proposed to be spent in the 2 year period. just briefly, again we have worked closely with the mayors office on the revenue projections and there are some in this that reflect [inaudible] revenue likely to occur thoferb next 2 year period. of course these are projection. if we know anything it is that we will

be wrong. these are some of the key revenue risks look ahead again. our sensitivity otthe moment in transfer tax to what is going on the commercial real estate in san francisco can't be underestimated or overestimated. or sensitivity to what is going on in high end property transaction and how that flouz through trangzfer and property taxes will create a quick down turn on these taxes when a recession does occur. imlmentation of the gross receipts tax, this is 600 million local tax base, the business taxes and this is the most significant change for the local tax policy in the lest 20 years. [inaudible] report to mayor

and board what we see. the way that state and federal revenue flows to counties relate today the afford nl care act is a significant uncertainty for us as well as cities and county in. as you know the affordable care act creates new savings for the heth department because folks that were not insured now are. this creates now cost for the state and the state proposed a rule that [inaudible] the revenue from the government to pay for the state cost. we call this the [inaudible] act cht that legislation that creates the formula by which that is calculated is adopted at the state level but won't know thought this will yield in term thofz amount the state will with hold until jaen 16. that amount can be higher or lower estimated in the most recent public health hev new

projections so we'll report back as we knee more on that. lastly is the continued economic growth cycle that we are in. we are projecting sustained growth in the 2 year period. if we do clear that 2 year period without a recession it will mark the 4th longest ikenomic expansion in the last 114 years and you will see that on this slide which sh the duration of the last 22 economic recoveries in the u.s. we have shown this slide several times during this recovery. if the 2 year period we are talking about in the 4cast takes us to 96 months och continuous economic expansion mptd you see the avrchblg period of economic recovery is about 46 month. if we goat through this 2 year period with continued growth which we expect is roughly twice the

period of expansion the u.s. has seen since 1900 and said this would mark the third largest period of economic expansion that woo have seen in the 115 years. just a caution as we enter into this. with that, i would be happy to take questions on the report or any other items the committee has >> thank you. colleagues any questions at this point? >> i did have that historical question. what was the period of growth, 115 years, what was that? >> i was not around for that one, so can't speak well to it supervisor. you had a series of panics in the early part of the 20th century leading to the great recession and if you look that chart since ward war 2 we have seen stable economic

growth than 1900-1930's. >> okay. colleagues any further questions at this time? >> thank you mr. rosen field. we'll head back to items 3 and 4 and get moving with our departmental hearings. [inaudible] mrs. carmen chew, former chair of the budget committee a few years ago >> i'll get started and say thank you for having me. we'll put our presentation on the cull puter. i do want to say thank you for budget and finance committee for your approval of the items not only the transfer tax item sponsored to supervisor farrell that helps bing transparency and our expansion for mlsa tool we think will be helpful to our office. i want to a moment

to introduce 2 individuals here woo me today. by deputy director over administration gg whitly as well as doug less [inaudible] i will direct the hardest questions to them. i do want to say there are a few things we'll cover in the presentation. we'll provide a summary of the market update and production status in the office. we'll speak about some of where wree headed as well as how the budget investment connect tooz that. a picture of key investments forward as well as year to year changes experienced in the office. to start i want to say how fitting we are falloge our controller mrs. rosen field. we are proceed to be of service to support the general fund. let me

talk about the market conditions that drive our work. i know that the board has been keenly aware of the real estate market as well as the policy decisions on how to address housing meads and space needs. for a moment i want to speak how the real estate market and your land use decision drive your revenue picture as well as our work load in the office. as you bow every sale, construction project and appeal as a potential to increase or kcrease property tax base that helps support the city and also one thoof primary source thofz general fund operations. we have seen in the market place a strong demand for real estate. as uknow which is driving case load up [inaudible] you know the transfer tax is a at a 10 year high. we are estimated to come in about 300 plus million dollars by thend of

the month. we have seen markee [inaudible] room key value of 500 to 900 thousand dollars. that is a reflection of increase and chaimpging we see in the market place. we are seeing construction projects happening, a road construction. we are seeing barriers to moving through the city and that is relate today the good econally with regards to construction of buildsingsism in the pipeline base odthen q 3 reports from the planning department about 958 project in the pipeline. 508 of those are entitled with 215 under construction. the city is moving forward can significant project like transbay terminant and

subway which is impacting [inaudible] bay view hunters point is moving to development. the midmarket space is leading to ren ovation. look that triple a building and you see a building that is transformed how it is used. not only do we have to address new construction we see in the market place but have to address and work on the workload generated by every sale and every subsquents renovation on all those units in the city. speak about the work load it is imcomplete if we don't speak about the [inaudible] last year we

2600 appeals filed. we have pending appeal cases worth 258 million dollar in tax revenue as of may 21, 2015. we want to give you here a smap shot of the case load over time from our office. you will take a look and see the bars represent the different fiscal years, red being fiscal year 13, gold being fiscal year 14, and the blue being the current year as the beginning of june. we still have a couple week tooz go. it brakez into different categories. we work on change in ownership case new construction case, appeal and partial management casesism you take a look and see over time what we experience is good progress in terms of working down existing case load and change in ownership and assessment appeals cases but where we are not doing quite as well where the

number of cases are exceeding our cupeace to work caseicize new construction and parcel management. that isn't a surprise given we have seen so much construction and parcel management is tied to construction. however, if there would beically slide to pay attention to, this would be the slide. this is where we expect to be in terms of outstanding case load will be over time t. is a pretty stark picture. it shows the kats quo, what is our existing budget and the blue line shows you what the budget request would allow us to do. this reflects new construction work as well as changes in ownership in the office. it assumes the 3 year average in terms of number of nigh cases coming in the doors qu assuming the

current year in terms of staffing and being able to work on different cases. what you see are a number of things, one is even with the investment we requested by the time we hit june of 2018 we expect to see hardly any movement in terms of outstanding cases we can work. this is significant for a number of reasons, one we think it create detrimental effects on the city. if we owe a refend we accrue interest in paying the taxpayers back and the longer we take the most interest. we are providing interest free loans to those that can pay earlier and a burden who can see a tax bill 3 years later with a very high number. the longer we take the longer the property will change hands and all is a new owner in place so that requires the tax collector and crorels office have to do more work to prorate a bill