and projecting opening of the site in april 2018. extend sincere thanks to mayor lee, supervisor ronen, and assembly member tang for their leadership in securing much needed expansion of navigation center beds in the community and happy to take any questions. >> thank you, i don't think we have any questions at this time. any other colleagues, any other questions? oh, miss ronen -- on behalf of supervisor ronen. >> thank you very much. supervisor ronen was unable to be here, but wanted to voice her strong support for these funds. supervisor ronen was instrumental in getting these funds and working closely with assembly member tang to address the homeless crisis in the mission and throughout our city. and she wanted to extends again a huge thank you for leadership

in getting the $10 million from the state to address enca encampments. thank you. >> thank you very much. seeing the colleagues have no other remarks and seeing there is no -- there is no budget legislative analyst report, i have one question for you, miss cohen. i realize the money is not site specific but given the cost of 125 bayshore, the lease, how many additional people do you expect that this money would allow us to house? >> that's a great question. these funds will go to open additional 250 beds and assuming, sorry, i'm bad at math, turnover of 4 to 5 times a year per bed, i think, you know, we can estimate it would help us serve 800, 900 people a year. >> ok. >> while its open.

>> another question occurred to me, related to the previous item, do we have a sense about how many money fast tracking navigation centers, fast tracking beds, fast tracking shelters, how much through, how much construction dollars it's going to cost through the emergency ordinance. any kind of expectation on the cost? particularly paying attention to tenant improvements. >> melissa. >> thank you. mayor's budget director. great question, supervisor. i will have to get back to you on the difference if we had not fast tracked versus fast tracking. what i can tell you, for the two sites, the $10 million covers all the one-time costs of getting the sites ready and covers the current year, almost all the operating costs if the

sites are up and running, as fast as we are hoping, and i wanted to thank supervisor ronen's office and the supervisors for moving this forward. pleased to get state funding what otherwise would have been generalized costs. i'll get back to you on that. it's a great question. >> colleagues, no questions and no one on the roster, open up to public comment. >> y'all call it silly hall. now, i agree with whatever you talked about. i just left your office, to let them know, please don't do that to me again. i support whatever y'all are doing for right now. so therefore, let's talk about, i support it. whatever y'all are talking about. now, i could speak public comment. bottom line, this city and county by the bay, i want all y'all to hear this. policy makers and all of y'all politicians, beware, black

history month is coming up in a couple week or so, the shortest month of the year. but my sister over there, i respect, all of that, but until y'all give me my respect, you can sit there and frown all you want. i was here before you came, i'll be here before you go. you are a cute lame duck but i don't give up. now, my name is ace i'm on the case. i'm going to be talking from here on out about the black community where our population is going down. one last thing before i say this. ♪ what's going down in this town ♪ ♪ the black population is going down ♪ ♪ but i want to know who, who, who, who ♪ ♪ who's in control ♪ right here, ooh, ooh, in san francisco, y'all ♪ ♪ hee hee hee hee, the city by

the bay ♪ ♪ hey, hey, did you hear what i had to say ♪ >> now, 20 seconds left. now, let me tell all of y'all, i'm going to respect everyone, i'm a grown man, got kids, got -- a lot of the politicians don't have kids, they act like they are for the community. my name is ace, and i'm on this case. >> public comment is closed. item seven, please. >> make a motion to pass nine. >> motion made by supervisor yee to be passed. >> positive recommendation to the board. >> thank you. item seven. >> appropriating 1.1 million

from the airport, and police training support facility capital project. >> ok. so, we have our friend from the airport, kathy wagner back with us today. happy new year, kathy. i think you are going to be speaking also on item eight as well. so, we'll take seven first and bring you right back up immediately. the floor is yours. >> thank you, chair cohen, members of the committee. airport is speaking your approval to appropriate $1.1 million in airport asset funds, the airport collects airport forfeiture funds.

may be used for capital projects and other expenses related for narcotic -- and 776,000 in asset forfeiture funds, and new amount, for total of 1.1 million to use towards the replacement for training training facility at the airport. the airport currently maintains an existing police training facility, but it is past the successful life. it passes restrooms and in need of improvements. improvements for indoor simulator room, observation tower, shooting range extension and improved infrastructure for

nighttime police training. the airport capital improvement plan does include funding to replace the current facility, at a cost of $7.2 million. and it will be funded with general airport revenue bonds. the total project increase would be $1.6 million, including the 1.1 million in asset forfeiture funds before you and half a million in airport funding. budget analyst has recommended approval but i will be happy to answer any questions that you have. >> thank you. i see no names on the roster, we'll hear from the budget legislative analyst. >> yes, as miss wagner said, use of asset forfeiture funds for the new training facility, police training facility. the plan includes $7.2 million for the facility. the police department actually asked for additional

$1.6 million in improvements, of which 1.1 the asset forfeiture funds and 500,000 other airport revenue funds. on page 16 of our report, table two, a detailing of what the additional 1.1 would be used for. these funds have been approved by the department of justice and the airport commission and we recommend approval. >> thank you very much. appreciate that recommendation. colleagues, any questions? all right. go to public comment. public comment item seven. >> i have a condition. although i'm patient, i am impatient of the city and county of the health department because of my surgery i had. i support the airport, all that, but we are going to go about what's happening out at the airport. it is discrimination out there at the airport. go back to history with the human rights commission when they had the cross out there, hanging cross. so, history is there. i'm historian.

before all y'all was with the airport out there, we had big problems with the blacks. human rights. back there when, may he rest in peace, ed lee was working with the human rights commission. my name is ace, y'all, i'm on the characters i'm not going to waste your time, all i have is a minute or some left. i support the program but the study is still pending. when i get up here and say i support it, i'm doing it for the viewers because everybody is on files. everybody, i have dosiers on everybody, you better believe that. yeah, i've been thinking i've been wrong, walking around looking like mr. magoo. but this city and county is in the brink of having a lawsuit that will stop everything out there in the southeast. out there in the mission bay. out there in everywhere. because in the fillmore, as i coin it, the feel no more, not around no more, and everybody look at me like i'm not around

here. i'm alive and direct. 33 seconds, i support ya, i keep that going. just yesterday i had to have the ambulance come pick me up out of the mayor's office. i was assaulted by one of the details that are supposed to be guarding the mayor. can you believe that? ladies and gentlemen, this is a blues break, they say ace you are not a reporter, you don't have -- when i get up and speak it's for the public and giving them information they don't hear from the conservative papers that's obsolete. my name is ace, damn it, and i'm on the case. >> are there any other speakers? all right. public comments closed. is there a motion? >> i'll make a motion to send item seven forth to the full board for consideration. >> passes unanimously. >> eight, resolution improving modification of the lease with

the united states of america offices occupied by the united states transportation security administration at the international terminal and terminal two at the san francisco international airport to extend the lease term by three years and adjust the annual rent to approximately 2 million. >> thank you, kathy. >> thank you, chair cohen, members of the committee. proposed resolution before you would approve the first modification to the airport's existing lease with the transportation security administration, and extend the term for three years, through october of 2020. the lease rent is approximately $1.7 million a year for total rent over the entire term of almost $6 billion. t.s.a. is required by statute to oversee at the airport, including airline passenger and

baggage screening offices and the airport is also required to offer the t.s.a. the necessary rental space with the fair market value rent. the proposed extension would retroactively approve the first modification to our existing t.s.a. lease, starting retroactively to november 1, 2017. the budget analyst office has reviewed the lease modification and recommends approval and i would be happy to answer questions. >> thank you for being available to answer questions. we are going to hear from the b.l.a. at this time. i do have a question for the b.l.a. you have noted the city allocates free parking to the government leases. maybe you can talk about that in your analysis. >> yes, in, just sort of repeat what miss wagner said, it's retroactive to october of 2020, the first year rent is almost

$2 million and rent is set by the airport and charges. it has 52 parking permits for t.s.a. staff at no cost. our understanding, this is our policy that it's at no cost to airport employees. opportunity cost of the permits is about $1.4 million per year. but because of the revenues to the airport under the extended lease, we do recommend approval. >> thank you, appreciate that. colleagues, do you have any questions regarding item eight? seeing none, public comment is open. >> where i am, the government, i'm going to be coming up here, let me back in the press room, oh, i support whatever y'all are talking about, off the record.

but public comment is mine right now. and i'm using this opportunity, ladies and gentlemen, to express my views, getting close to black history month, talk about everything else. so, black history month, ladies and gentlemen, y'all are going to find out what's going on at silly hall. the black folks from the janitors up to whoever is doing what. a special that i've been trying to do for years, i'm going to do it this year. bottom line, my name is ace i'm on the case, has to be a new beginning, has to be an uproar from the ground roots and brought up. we as black folks, i'm telling y'all, i'm here at city hall, y'all, over all y'all. i created that, until you find and put some legislation together to stop me from being up here, testimony, and they are going to try it, trust me, i'm going to tell the word until i got what everybody else has. white media, asian media, we do not have black media here at city hall. what's wrong with that y'all,

discrimination, y'all, i'm trying to tell you at city hall. my name is ace, i'll give the 45 minutes back to y'all. >> public comment closed. >> motion to pass out of committee with positive recommendation to the full board. >> all right. motion unanimously accepted. thank you. >> madam clerk. item ten. >> item number ten, hearing on the overview of the budget, projections and instructions requesting the controller's office and mayor's budget office to report. >> melissa and kelly here from the mayor's budget office. be we begin, a couple remarks. so, colleagues, budget season is almost here and the budget subcommittee will be meeting soon beginning in march.

we'll be trying to identify specifics the board's highest priority budget issues. this will help us identify the greatest needs across the city and focus our budget presentations on the departments that are most directly intersecting with our policy priorities. i believe this will help us bring the budget discussion more into open. it will allow us to start conversations earlier, and generally provide for a more transparent process. i look forward to the active participation, not only of the stakeholders, but also colleagues and department heads. and that, transition over to melissa whitehouse from the mayor's budget office. >> on behalf of all three financial office, we look forward to working with this committee to implement the changes noted by the chair.

mayor's budget director, and i wanted to introduce kelly kirkpatrick, deputy budget director, and acting budget director when i'm out on maternity leave. and we are joined by others, should you have any questions. this was a joint effort putting out the joint report. so with that said, we are going to cover the joint report, in the off year of our five-year financial plan this year, that means we are doing a four-year update to last year's five-year plan. we are going to be then looking forward in some of the existing areas of concerns and future risk and uncertainty, and kelly will give a quick overview of the budget instructions we presented with mayor lee in early december. so, first before we jump in,

talk about, two summary slides, if everyone leaves today's, what do i want you to take away? short-term, the fiscal picture is similar to this time last year. the committee, here for last year's budget, very familiar. so, we had about a $287 million deficit in the march update last year that we had to balance by june 1st. this year, the upcoming two-year deficit, projected to be about $262 million for the next two years. so, not, you know, similar to where we were in the spring. but i think the thing, i did talk about with the committee last year and still on my mind, concerns in the medium to long-term. so, existing areas of concerns that show up in the joint report. and that is around a growing employee cost. the cost shift from the state around the in-home support services program and the large and growing number of baselines and set-aside. and future risk and uncertainty,

areas that i'm watching and all watching very closely, timing of the economic cycle and a lot of risk from the federal government around tax reform, affordable care act, budget shutdowns, etc. so we are going to go into a lot more detail on all these items, that's the high level, and when i think about knowing that about our fiscal picture, you know, what do we advise policy makers to do, and thinking about this, we need to continue fiscal responsibility that mayor lee had priced, and the same with this committee in last year's budget process, continuing to grow our reserves, limiting ongoing and funding strategic investment. so the capital budget, i.t., other items to flex up and down if the revenues take a fall and also things that really provide savings over the long-term if we fund them today. instructions to departments, similar to last year. 2.5% revenue or reduction

targets in the first year, 5% in the second year. no growth asking departments to absorb cost increases and strong emphasis again on no new f.t.e.s similar to last year. >> kelly kirkpatrick, deputy budget director. published a joint report in early december, and update to that, update the deficit in march. the report published in december, assumptions underlying the report, it first starts with a base case projection, stating that given current policies as they exist, projecting out expenditure and revenue based on that, should policies change, you know, that would affect the deficit projections, and from there, the revenue assumption, underlying the report, the economy is strong, there is no down turn or assumed in the deficits, that would definitely impact our projections.

that revenue growth is slowing in the outer years due to constraints. generally the report assumes growth of benefit costs for employees. notably, health costs are exceeding the rate of inflation, by quite a clip. and pension costs are also growing at rates that we had not anticipated in previous projections. and melissa will dive more into the details of what is driving that. additionally, we do assume inflationary costs on personnel. again, these are projection assumptions. we are mandated to balance the budget by june 1st, so the deficit is, you know, showing that we must bring those in assignment. additionally, citywide costs assumed nonpersonnel, grants from nonprofits, the costs, we will look into more detail about that, about cost shifts from the state are included.

and from a politic perspective, includes funding for the hall of justice exit plan. melissa stated the upcoming two-year deficit is approximately $262 million, where we were about march of last year. but, over the four-year horizon of the report, you'll notice the top line projects out the revenue is expected to grow to about $437 million, expenditures are expected to grow to $1.1 billion, leaving a four-year deficit in that, sorry, deficit in the fourth year of 709 million, so it's driving that gap, expenditure, the largest are the assumption of salary and benefits, making up nearly half of that deficit. and further, citywide operating costs make up about a quarter of the expenditure growth, and that is again inflationary drivers related to nonpersonnel and grants. and then baseline and set aside

as we talked about a lot. you know, rapidly growing. of the 16% of the expenditure growth, nearly three-quarters are tied to the m.t.a. and children's baseline growth. and departmental costs are the smallest pieces of the pie, they are making a bigger percentage than years past. represented 5% of the expenditure growth, and now it's 11%, and that is largely driven by the massive cost from the state cost shift. >> great. drive into a couple more of those cost drivers. so, one thing i've been thinking about a lot, and talked with the committee last year, we started noticing it, about our structural deficit in the out years. this is what the financial plan has allowed us to do, to look forward into the future and see problems on the horizon. and you can see from the chart, taking the fourth year of every report since 2011 that our

offices have issued. and it's showing you that in 2011, the year for projected deficit was above 700 million, and came down several years in a row. and in 2014 when we put out the report, we had halved the structural deficit. brought revenue and expenditure closer in line with each other, which is really great. and then a period of extraordinary growth and the benefit is back over 700. so we have thought about why is that happening and figure it out. and by and large the biggest answer is around rapid employee cost growth. when you look at what's happened from when we put out the 2014 projection, you can see that pension costs are the most significant change, about 200 million plus of the change and the deficit, and that's as a result of losing the lawsuit, that says in years when we have one time better than expected

news, with he have to give an ongoing base building coa to the retire he is. and when -- assume 7.5% return every year, i know very familiar with, and in years when we do not have that, it's phased in over five years. and the reretirement system updated the mortality table, and the employees are living longer, an excellent thing. paying pensions over a longer time period. the next biggest thing is actually c.p.i. has gone up, so the assumption or report we pay c.p.i. means that it has gone up in our report as well. and the last thing which kelly noted is the health benefit. health benefits, especially due to the uncertainty in the market with the current federal administration and the affordable care act, almost double digit growth for employees in the health benefit, almost three times inflation.

that's having a big impact. a slide digging more into the pensions. a sense of looking at the budget what has changed. ten years ago, spending 2.5% of the general fund on the employer contribution on the pensions. today 7% of our general fund. even though the general fund has grown significantly over that time period, the percent of the general fund spent on employer contributions on pensions has gone up, and you can see correspondingly it has gong up a large amount. and compared to the problem -- projections a couple years ago, hit the peak and then down with the orange line, the costs are going up on the red line. so, higher, already higher than what we thought was going to be the peak in 14-15, almost 100 million above that by 2021, a really significant change from a

couple years ago. and then one final point on employee cost growth, and the reason i want the slides in here, i want people to understand why we are saying no new f.t.e. when we add it into the city's budget, it's not that we are not proud of and happy about the service restored after the down turn and the board and mayor lee have added to the budget, we are, but now we need to stop growing and need to maintain as best we can. because the costs of an employee is going up much faster than our revenue growth or inflation. so that's something that we are thinking a lot about. pt and then i want to thank supervisor tang and supervisor peskins for the hearings they have called and the attention to baselines and set-asides, something a big concern. slides lifted directly out of a controller's office presentation and the only two points on that are similar to pensions, if you look back, many years ago to the mid 1990s, spending about 14% of

the general fund on these voter mandated base lines and set-asides and now over 30%, almost a third of the general fund budget. makes it so the mayor and the board are not able to make policy tradeoffs and decisions on how to spend in certain areas. and particular point, how unique in san francisco. statewide, there are 19 baselines and set-asides. most have non -- i'm sorry, we have 19. across the state there are only ten. so, really very, very san francisco specific issue. and next i know this committee has heard a lot about this, and supplemental that you all supported very recently on the ihss program was the largest part of that. you can see the bottom line on this chart is showing what we

projected growth to be, 80 million growing to 96 million. and now what we are projecting is that it's going to be 175 million by the end of the four-year cost shift from the state on this program. so something that is also a very large chain from the report put out even last year. so, now i'm shifting away from things that were in the report to things that i'm, that we are all thinking about that are not reflected in the report. slide 16, to say with he have seen a lot of growth, eight years in, the third longest economic expansion since 1945, the gray line showing on average growth of about five years. so, we are overdue for, you know, some sort of shift in our economy, and no one sees one on the horizon. i'm not saying that there is one coming, just something that we are mindful of. and this next slide, 17, to really try to put that in context. so, when i say we can have a big

economic shift, what would that mean and look like, and for me, the two revenue sources i would look at to think about that most are fund balance and transfer tax. transfer tax, the blue area on this slide. transfer tax is generated 75th% is generated on $10 million and above commercial properties changing hands. so, very, very volatile revenue source. you can imagine a change in the economy and large commercial properties stop changing hands, that could dry up quickly. and similarly, fund balance, one-time generated benefit, you can see how much that fluctuates over time. it's not an ongoing, stable source of revenue like property taxes or other things. right now in the current 17-18 budget, almost $500 million assumed on these two sources. in some years, in down times, 100 to 150 million.

this is where i would look if we were seeing a shift in the economy, to see what's going on with these sources. the last item of note on this, as i said, not a lot to say in the committee. i know it's been great having a state and federal select committee i believe you will hear in february, but so much risk from the federal government. how will the tax reform play out for us, the individual mandate requirement going away in the tax reform, and then any other larger changes around affordable care impact us. will there be potential future government shutdowns. all of these items are unknown to the city and so i still feel like although we have not seen anything very drastic yet in our city's budget, related to the federal government, i am very concerned about how this year's budget might be impact the by actions taken at the federal level. >> i have a couple questions. >> please. >> you know, there's been discussions of some budget supplementals that colleagues are going to be introducing or,

and/or have introduced. and a little concerning about the level of commitment that we are committing ourselves as well as future boards. i don't know if there is any insight you would like to share with us as we continue to move forward, particularly as we go into the hearings about supplementals, and how they have an overall impact. >> that's a great question, chair cohen, and appreciate the question and share your concern. say to people and policy makers when considering supplementals, asking someone, do you like a certain thing, probably the answer is yes, but i think for me the most important and hardest thing to do is to make these tradeoffs in the largest context. so, if you want more child care spending or more street cleaning or homeless spending, all of those should be considered together when you know how much money you have and what

tradeoffs you are making. if you decide to do one thing in ice lake, you are making a choice. you are taking away authority to decide to spend that money on something else at a later date. and any money that gets generated in the current year, from one-time savings, we have assumed that money goes to balance the budget. i always encourage any policy maker that will listen to me to try to maintain making those decisions whether they can see the whole picture. that's all a better public policy outcome in my personal opinion. >> thank you, the governor was giving his state of the state address this morning, i was able to listen to a little of it, and i wanted to hear what was going to happen with health care funding. president trump has taken measures to try to restrict our federal dollars when it comes to allowing us to fund our public

health system, and the state has not really risen to the level of assisting us with backfilling or adding additional funding so state levels. so, what are we going to do with here as a city and county level, how do we address this, i think it's several million dollars, 20, $24 million, between 20 and $50 million, significant chunk of money that will have an adverse impact on children, seniors, folks with disabilities. what's -- >> i totally hear your concerns. so, i don't know off the top of my head for the children's health insurance program what would be the impact here, but i know that you have called and appreciate state and federal select committee in february, great time to get an update on that program. a couple things i would say, this board and committee in particular, along with mayor

lee, were very wise to put aside $50 million reserve for the affordable care act in last year's budget, still unspent and i think that's a really nice thing to have in our back pocket to help mitigate any potential big risks in this year's budget related to health care. otherwise, you know, i really -- still so unknown. i know that this committee as well as our three financial offices are watching very closely. >> ok. colleagues, i don't know if you have any other questions for the budget director. i appreciate your thoughtful presentation and ongoing concern for the fiscal health of san francisco. thank you, miss kelly, appreciate that as well. >> apologize. >> i thought, i was on the wrong slide here. i was wondering if we could maybe at a future hearing or so hear a little bit more about what we are doing in terms of addressing the rising pension obligation. >> good idea. >> i think that would be great,

as well as f.t.e.s. i don't know how we can do this for every department, but i would like to see, i mean, i always see in budget instructions no new f.t.e.s, but yet it still does kind of continue to grow. i wonder if we could do a deeper dive with departments so that at least we have the full set of information once budget season comes. thank you. >> just to clarify, do you mean looking over the past few years who has grown where and that type of analysis? >> i would say probably the last 5 to 10 years. >> absolutely can provide that. >> thank you. supervisor yee. >> i guess to add to supervisor tang's request, might make sense to break down the additional f.t.e.s that we have added during those years. the funding sources that actually make that happen, where

there is, you know, our local dollars versus, you know -- >> we would be happy to provide that and you are definitely right, especially with the affordable care act growths and other things, nongeneral fund sources that also led to growth. and the airport and the m.t.a. are a very significant part of our growth. so, yes. >> and i guess you want to think beyond that. some of the f.t.e.s, the growth that came from outside sources eventually dried up, and we eventually let go of those positions. so, or did we just absorb them? >> are you asking have we backfilled other cuts with general fund, to clarify, i'm sorry if i don't understand. >> sometimes i know we have contracts that come in or get additional funding from somewhere, to maybe, and the staff the positions, temp positions, for five years or

whatever. the money dries up, but do we let go of those positions or do we actually backfill it with our local knowledge? >> i see what you are saying. yes, we have certainly gotten grants over the year and case by case basis whether we backfill them. it's always something i pay attention to, good question. >> i don't think we have any other questions. thank you, go to public comment. public comment is open. >> this particular issue, i have very much knowledge on and also i don't have knowledge on. so, i'm not speaking to nobody but who look like me in this room here. who has the responsibility but they weren't around with the outmigration. supervisor cohen, yourp auntie was on that committee, miss cohen, i very much respect. so you, young, good looking,

don't think i'm doing -- don't come back ten years and say i tried to assault you. bet i'll be at every section. supervisor cohen, in the ten years you talk about growth, what happened to the black, african, what happened to the outmigration, what happened to the dollar signs spent on people that look like me in your community, supervisor cohen. if linda was here, i would tell her the same thing. she was on the task force, outmigration. the city and county is going to be responsible when i file a lawsuit, talk to governor brown. i don't think he knows what's going down about our population. the lieutenant governor knows, he put together the outmigration and put in charge, i'm the czar, and you look at me like i'm looking stupid like mr. magoo. the budget, my question to the supervisor, on your head and also london breed.

what about the black people that look like you and me. what happened to us? we had 3% budget down at the bottom, but budget is 10.1 billion. with a b. but don't say anything about the looks like you and me, supervisor cohen. going to be chairing the meetings. i'm going to be there at every meeting doing what i do right now, expressing that we as a czar of outmigration, we need to be adhered to, we need some money, too. my name is ace i'm and the case. >> public comment is closed. is there a motion to file? >> yes, motion to file the hearing. >> thank you, motion to file the hearing accepted and passed unanimously. madam clerk, any other business before this body? >> no other business. >> thank you, we are adjourned.

>> they tend to come up here and drive right up to the vehicle and in and out of their car and into the victim's vehicle, i would say from 10-15 seconds is all it takes to break into a car and they're gone. yeah, we get a lot of break-ins in the area.

we try to -- >> i just want to say goodbye. thank you. >> sometimes that's all it takes. >> i never leave anything in my car. >> we let them know there's been a lot of vehicle break-ins in this area specifically, they target this area, rental cars or vehicles with visible items. >> this is just warning about vehicle break-ins. take a look at it. >> if we can get them to take it with them, take it out of the cars, it helps.

>> good afternoon, everyone. this meeting will come to order. welcome to the january 24, 2018 regular meeting of the rules committee. our clerk is alyssa