it all starts here at the office of small business. >> item 9, adjournment. action item. >> i move. >> i second. >> president adams: all in favor? >> aye. >> president adams: meeting adjourned. [adjourned]

>> good morning, ladies and gentlemen. i'd like to call this meeting to order. >> all right. thank you sfgovtv, and ladies and gentlemen, want to welcome you back to another exciting meeting of the budget and finance sub committee. my name is malia cohen. i'm the chairman of this committee, and to my right is supervisor sandy fewer. joining us shortly in this meeting will be supervisor safai. i want to thank jessie and michael for assisting us with today's broadcast. our clerk of course is the lovely and talented miss linda

wong. thank you everyone for joining us here today. madam clerk, are there any announcements? >> yes. please silence all cell phones and electronic devices. speaker cards and any documents to be included as part of the file should be submitted to the clerk. items acted on will be on the april 16 board of supervisors agenda unless otherwise stated. >> supervisor cohen: thank you very much. i'd like to call item number one. >> item one. [ agenda item read ] >> supervisor cohen: all right. thank you very much. supervisor peskin is the sponsor of this. i think we've got beth rubenstein here who's going to be presenting from the department of public works, and i don't know if julia dawson is going to be here, as well. >> i'm here. >> supervisor cohen: all right. this item is a 240 day

extension from jc decaux from public kiosk. thank you. the floor is yours. good morning. >> good morning, chairman cohen. we're here toed to ask for an extension. what we've been doing recently we ended up in a review at the historic preservation commission and they asked us to step back and do some design evaluation. as a result of that we brought on beth reubenstein to help with the design process, and it's actually been going well, so i'd like her to come up and talk about what we've been doing with the design of the toilets and kiosks. >> supervisor cohen: great. thank you. >> good morning, supervisors. thanks for hearing this item. so last year sort of late spring summer and fall jc decaux had an initial sort of draft design that moved through

historic preservation and also the arts commission specific design and review, and they reviewed it and it got stopped. they were concerned about i would say the utilitarian nature of the design. it didn't have the uniqueness and flair that we would hope for an important san francisco assets. these kiosks and toilets will be on the street for the next ten to 20 years. we wanted to step back and balance this contract that's really been beneficial for the city so we'd like to get that contract completed as soon as possible. we'd also like the toilets and kiosks to be as beautiful a possible. >> supervisor cohen: we got it. this is just an extension of the contract. supervisor fewer, any remarks? >> supervisor fewer: no. i think they're lovely and i

just want one in my neighborhood. >> and we talked. >> supervisor cohen: all right. well thank you for the presentation. let's go to public comment. if there's any member of the public that would like to comment on item number one, seeing none public comment is closed. all right colleagues is there a motion? >> supervisor fewer: yes i'd like to make a motion to move this to the board with a positive recommendation. >> supervisor cohen: all right. we'll take that without objection. thank you. madam clerk, could you do us a favor and call items two, three, and four together. >> clerk: yes. [ agenda items two, three, and four read ]

>> supervisor cohen: all right. so before us we have three resolutions for concession stand leases in the international terminal in sfo. the best part about all of this is the combined leases will bring a minimum of $9.7 million in revenue to the city and county of san francisco and we've got our friend cassy widener from the airport to tell us all about it. >> good morning, chair cohen. >> supervisor cohen: good morning. >> cathy windenerdener for the san francisco airport. we are asking for three new leases in the international terminal a with sfp america for a manufacture food haul black point coffee and boudin bakery. the length of time for the sfp

america and boudin lease is ten years, and the black point coffee is eight years. all three leases have a ten year option to extend and are the result of a competitive proposal process. the leasees will pay rent either the greater of their minimum annual guarantee fore a tiered percentage rent formula. this will result in an annual rent amount over the initial term for all three leases of $9,570,000 at a minimum, although airport staff does expect that the leases will be paying on the higher of the percentage rent formula. the rent commencement date for each of the leases is either the earlier of the completion of construction of tenant improvements or 120 days after the tenant occupies the lease space. the budget analyst's office has reviewed and recommends approval and i would be happy toer answer any questions. >> supervisor cohen: thank you. i don't think we have any questions at this time -- oh, excuse me supervisor safai.

>> supervisor safai: just in general, and i understand i'm just sitting on the committee today, but i have a question. i look at the name of the people that apply. a lot of them are smaller cafes in san francisco but when i get briefed from a budget and legislative analyst it's always the larger businesses per se. you don't often see a small local san francisco based company that's often being chosen, so i'm wondering how you're putting your bids together and what kind of effort you're making to ensure the smaller mom and pops are really having a shot at san francisco airport. >> there are a couple of ways that we do that and i'd be happy to get you further background but just to answer your question generally, there are cases in this -- in this lease right here the lease with sfp does actually have a small business component.

they partnered with marina's cafe who will be operating as part of this lease. i believe it's 35% so there are opportunities for partnering. airport staff goes out into the community to try to get folks interested and we set the annual guarantees purposely low -- >> supervisor safai: i guess i'm asking a different question. i know in the ferry building once someone is a really established business they're no longer allowed to be part of the lease. so when i say cafe roamma on your scoring system score 56 points and i see sfp scoring at 102, what i'm saying is how are you putting together your packaging in terms of your scoring; and two, do you ever consider not allowing some of these already established businesses that have locations all over san francisco and allowing some of the smaller mom and pop businesses an avenue to get a foothold. because once you're in san

francisco airport that is a pretty lucrative opportunity so that's what i'm asking. >> i can get more detailed information to you because i know that our revenue development staff does look into that and takes it seriously. we have pop up opportunities at the airport as well which has a $250,000 gross revenue requirement, which is low. >> supervisor safai: i get it. >> so we do try and do that but i'll try and get you further information on outreach. >> supervisor safai: i'm fine and i'm prepared to let this go. what i'm saying is when i'm in san francisco airport, i don't see it. i see businesses that are well established and they're all over san francisco and i don't see mom and pop shops get that opportunity. that's what i'm saying. >> okay. thank you. i'll pass that along. >> supervisor cohen: all right. at this time i want to pivot and hear from our budget legislative analyst and hear what their thoughts are on these three items. good morning. >> good morning. i'm from the budget and legislative analyst's office. i think miss widener has

summarized the leases pretty thoroughly. as you hear the first year guaranteed rent to the airport would be about 990,000. it would be about $9.6 million over the term of each of the leases and they do a percentage rent which would be higher than that amount and we recommend that approval. >> supervisor cohen: all right. thank you. we'll take that recommendation under advisement. at this time let's go ahead and open up the public comment. any member of the public who would like to comment on items two, three or four please come up. seeing none, public comment is closed. thank you. i'd like to make a motion to approve these three items and send to the full board with a positive recommendation and it looks like i can do that without objection. thank you ladies and gentlemen. next item

that's what i thought. okay. let's hear from the budget legislative analyst has to say. >> yes. as his alicemiss alice pointed out, these are the same that the board approved its two year fixed but jet in the last budget cycle. it's not in the report but i will respond a little bit to what was said in terms of the controller's office hoping to have more two year fixed budgets going forward. we did say two years ago in our report that we considered it important for the board not to give up their appropriation authority and budget review every year. that was our finding two years ago. in terms of the four budgets

this year they are the same as the last two years and we do consider this a policy matter. >> supervisor cohen: okay. are there any questions? no. okay. >> i would only add that there's nothing -- the board is not giving up any of their approval appropriation authority or review -- authority to review or appropriate a budget when you review two year budgets. so i think that's the substantive discussion or argument that we can have but this doesn't do anything to change what comes before the board or how you may choose to review it. >> supervisor cohen: absolutely. i also want to remind that these are also the same departments as adopted in 16-17, 17-18, so we've got a track record established. i'd like to open up the public comment at this time. my member of the public to come in and speak on item five? seeing none public comment is closed. thank you. i'd like to make a motion to

send this approved to the full board with a positive recommendation and we can take that without objection. >> clerk: madam chair, would you like to send it as a committee report? >> supervisor cohen: i'll send it as a committee report. we can do that without objection. thank you very much. and colleagues, before we dismiss, i would like to make a motion to excuse supervisor stefani from attending today's meeting. can we take that without objection? all right. without objection. is there any other business before this body? >> clerk: there's no other business. >> supervisor cohen: all right. ladies and gentlemen, we are adjourned. lics

cc1 test message test text1 underline test text1 italics cc1 test message test text1 underline test text1 italics >> all right. good morning. good morning test text1 underline test text1 italicseveryone. my test text1 underline test text1 italics name's -- [ inaudible ] >> i firmly believe that test t nonprofits do their best work when they're focused on programs and services for residents and their mission not when they're worried about real estate and rent and leases te and how to protect their office space and risks test t of displacement. that's why test text1 underline test t in 2015, oewd under the direction of mayor leigh and then under mayor farrell, test text1 under created the nonprofit initiative. this was created specifically to help nonprofited strengthen and test t grow in san francisco. our nonprofit sector manager thank you for all the hard work test text1 underline test text1 italics that you do. [applause]. >> this initiative also test t includes test text1 u $3 million

in oewd's budget to support test text1 underline test t nonprofits and make strategic and smart investments and help nonprofits stay and grow in san francisco. today we are here at creativity and explore in te district eight test text1 underline to announce ten grants totaling $500000 to ten amazing test tex organizations in san francisco. ranges across all -- all across the city, in a range of service area and program test areas and missions. i want test text1 underline test tto begin first by thanking linda johnson for -- the executive director for test text1 underline test t creativity explore for hosting us here in your amazing space. you're going to hear a lot more about linda here in a moment but first i want to invite mayor farrell up here to say a few words. mayor farrell was the test longest serving member of the board of supervisors test t and the committee chair. every year my organization went to test t the committee and ask for funding like this, mayor test t

farrell was always there to support us and was a strong advocate for the work that we do in the test text1 underline test text1 italics nonprofit arena. >> test text1 underline test text1 italics thanks, todd, and test text1 underline test tex thanks for having us. thanks test text1 und linda for having us here today. it's amazing to are test text1 underline test text1 i here at creativity explore. our nonprofit is what we count on as a city government to deliver services throughout the city of san francisco, services as a government that we don't provide test text1 underline test text1 italicsdirectly but we can partner with amazing nonprofits in every single district in our city which is what we're doing right now. proud to be here in district eight, and supervisor sheehy has been a leader in this district, as well, to recognize those nonprofits that are making a difference in our neighborhoods. as todd mentioned we're here today to announce that we're making test text1 underline test t a $500,000 grants to a number of different

organizations, test t 75,000 of which is going to creativity explore, which is incredible, so please give them a round of plauz for test t that. test text1 underline test text1 italics [applause]. >> and you know, it's inspiring to be here. creativity explore test text1 underline test text1 italics helps thousands of individuals working every year and being exposed to the arts. i was able to speak to gerald every year and you showed me that some of your masks that you've created and you're going to have your own art show. isn't that test t incredible? [applause]. >> the individual artists test that are back there, you know to me you can't help but tour an organization like this and be inspired and be more -- more and more, i would say, test t motivated every single day to support organizations like this to do the work that they're doing. this is the heart and soul again, of san francisco. we are going to support every single community in our city and these individuals that need our help as a city to see them

engaged to see them test t succeeding to see them take pride in everything that they do it is just incredible and i'm proud to be proud test t of it. again, thank you for being here today. congratulations to creativity explore on the grant, but also let's make sure that we take this as test really test text1 italics inexpiration for the future, that we continue to fund nonprofits for the city, that test text1 underline test t we continue to inspire san francisco, that we continue to redouble our efforts to make sure that every neighborhood has outlets like this to make sure that we service every single san francisco resident. thank you for coming here today. >> thank you mayor. i next want to invite up supervisor jeff sheehy, supervisor the district eight. he also sits on the budget today. he's been a tireless test text1 advocate test t for the nonprofit community, and supports nonprofits and small businesses in the city. i want to welcome up supervisor jeff sheehy.

[applause]. test t >> supervisor sheehy: thank you, todd and i want to thank you, linda. what an amazing program what beautiful work that's taking place here today. i am so proud and test tex honored to have your organization and test text1 underline test text1 italics creativity explored in my district. i also want to thank mayor leigh and now mayor farrell for continuing the program. as we know, it's gotten harder and te harder for nonprofits to survive in the test text1 underline test text1 itacity, and test text1 underline test text1 italics this in inno vatetive program out of oewd is really going to help nonprofits stay in san francisco. anybody who worked in the field know how much stress this sector of our connect is under, and the work that they do, as mayor farrell has test t mentioned is some of the most extraordinary and important work test t that they do in the city. i walked through there, the happy faces and beautiful art, it is really something that is "au" inspiring. thank you mayor test text1 underline

test text1 italics test tex leigh --e and thank you mayor i don't remember farrell and test text1 u thank you linda. >> thank you, test text1 underli supervisor. i want to invite linda johnson up and i got an opportunity to talk to her on friday, and hear the test text1 underline amazing artists and the amazing test text1 underli leadership she brings to the organization. and the one thing that came through loud and clear is that by us being able to help her with this grant it frees up her time to create not just a better space for her artists and her organization but allows her to spend more of her focus on the mission of the organization rather than on real estate rather than on risks displacement and worrying about those effects, and so i want to invite test text1 underline up miss johnson to you can at that atalk a little bit about te creativity explored and what that means a little bit to her organization. linda? >> good morning everyone. so first of all, i'm hear to

thank the city from the bottom of my heart. for over 30 years we've occupied this space which test text1 underline test text1 itali is the former dance hall, so please tour around and check it out. our artists, our staff and this space are the source of the magic that make so many test text1 underline test t people fall in love when they walk-through these doors, and this is our 35th anniversary year for that whole time, we've been helping artists with test t developmental disabilities develop their test text1 underline test text1 craft and gain respect as iffull flejed test t members of the arts community. the test text1 underline test t 130 artists that we test text1 underline test text1 italics serve every year develop test skills and te earn money and become a part of a close test text1 under knit community. their work decorates test t many real estate developments around the city and test text1 outside the city and their work is licensed onto

products by businesses like test text1 underline test text1 rakudi chocolates and cb test tex 2. over 10,000 people from all over the world visit this gallery and our test t studios every year and our staff are an test t unusually devoted group of people. many of them have worked here for 20 years or more and they do what they do out of test text1 underline test text1 italics test text1 underline test text1 italics real love for the community and the people that they serve. we are extremely grateful because we have an test t incredible landlord, and his test text1 underline family. we pay below market rate at this site but none theless, we're still struggling. our test t facilities haven't kept up with our growing staff test text1 underline test t and the needs of our artists. as you tour around the test text1 facility you'll see the kitchen facilities that we offer are just a few cabinets and a countertop, and test text1 underline test tex there's no sink. we have no provide meeting

space in the office except test text1 underline test text1 italics in my office. where only about five people can sit, test t and there's most important no respite space so that if our artists get overwhelmed and they need a break from the day-to-day, a kweeet place to go there's no place for them to do that: and we've had also no way to accommodate our growing staff as we continue to grow as an organization so the grant is solving so many problems for us. soon our staff is going to feel appreciated when they can sit down for a break at a wonderful kitchen, and our artists will have a place to go to take a breather when they're having a hard day and they need to be alone. and we'll have a real conference room so we'll be able to repurpose other space in this facility for more work stations to add more staff to work harder to expand our mission and meet more test text1 under needs. and that's going to help us serve more artists and bring

more of this beautiful art to the world. so i just want to say thank you to mayor farrell and all the hard working staff at the city and at test t northern california community loan fund who made this investment a reality. it means so much to us. and i also want to give a short shout out to our testgala which is coming up on april 20th. test text1 underline it's called art changes lives, and please check out our website for test text1 undtickets. test text1 italics [applause]. >> you know in order for initiatives like this test t work, it takes a partnership test text1 underline with the test t nonprofit community, and we designed this initiative to be that partnership, and we couldn't have asked for a better test tex partner than northern california community loan fund. joanne is here today, and she's been a key driver and test text1 underline test text1 italics organizer of this program. i want to invite joanne test text1 underline te leigh up to talk. >> thank you todd. in this rapidly increasing real

estate market no other city has provided this kind of leadership to create programs and devote test text1 underline resources to help keep nonprofits in their test text1 u communities. so san francisco has really addressed this crisis head on first led by mayor lee by launching the nonprofit displacement mitigation program, and now, the prop test text1 underline test t nothing further sustainability initiative test t supported by mayor farrell. we are proud to partner with the mayor's office of economic and workforce development, the office of housing and community development, and the te arts commission to make sure our community based organizations remain in san francisco. so our social service in child care and arts organizations are great at delivering the vital services and creative programming, much like you heard from test tlinda, but they're really unfamiliar with space planning with lease and purchase negotiations and test t tenant improvement budgets. so this test text1 underline test t knowledge gap is compounded with san francisco's

volatile real estate market and has put our nonprofit test organizations at great risk. our technical assistance services offered by ncclf through this program helps organizations navigate the hot real estate market and find test t spaces that meets their needs. these grant awards are test text1 underli critical in supporting our community-based organizations to stay in their test t neighborhoods where they are needed, providing security for their clients and staff, and alleviating real estate costs and oftentimes test text1 u incentivizing landlords to enter test text1 into test text1 i languager termlonger term leases. these awards will support ten organizations test text1 underline test across our city, from test text1 underline chinatown to tender line. i congratulate te creativity explored and all of the entities today and thank the city for developing a model program and especially a shout out to todd and lex te at oewd for

their continued guidance. this test text1 und ensures that our social services child care and arts programs continue serving the residents of san francisco. thank you. [applause]. >> thank you, joanne. you know joanne brought up a really important point that other cities in test t other regions across the country have looked to the city of san francisco as a model for how we're supporting nonprofit organizations, and that's taking a page out of the play book that we're doing here but we're also sharing with our colleagues and partners across the country. this is a partnership of city departments, and i want to thank mayor's office of housing and test t workforcevectionment tom test text1 underline test text1 italics decaney, and talk about the test text1 underline test t arts commission and their help in creating great spaces like creativity explored. >> thank you tom and lex and nccf and all of our partners and all of our elected officials, supervisor sheehy

and mayor farrell for championing this initiative. i just recently was sharing some of these promising practices both of our colleagues in seattle and portland and they are really impressed by the investment that we're making here in san francisco in local nonprofits not just in real estate but in the technical assistance and in building the capacity to respond in a very challenging real estate market so i'm particularly thrilled to see in this round of grantees a large number of arts and culture organizations, including test text1 under creativity explored. my long time colleague linda johnson, it's really a great honor to be in your space today and feel this te incredible art making. we've done some incredible work at helping stablize organizations. there's more work test text1 underline test t test text1 underline test text1 to be done so i'll ill i'm thrilled that these organizations are going to continue so congratulations to all the artists here at test t creativity explored and all the great work that you're test text1 underline doing. thank you. >> thank you. finally, i want to invite up the artists. you know the reason that we do

this the reason that everybody is up here today is because of the mission of creativity explored, and what that boils down to is the test t artists here doing amazing work. if you have time, i encourage you to go around and look at the amazing work that these talented amazing artists are actually producing. i want to invite up test t two artists along with paul, who will facilitate a conversation with these test t artists please. >> hello. i'm test t paul and this is gerald test text1 underline test text1 italics wiggins right next to me. gerald i think the mayor has met him. has some work in this show but also in the studio and evan of course has a test t lot of test text1 underline test text1 italics artwork in the studio. so after this, if you want, me can give you -- i can give you a tour in the test text1 und studio more in depth if you're interested. so i have a question for kevin.

so what do you think about getting this money from the city and having money -- you have to come closer to the microphone. >> i want to thank the mayor and i want to thank everybody for this. this is going to be a door opening for our school and it's going test t to help the whole school and it's going to make the building better and i'm really honored that we're getting this grant. and i'm -- i'm very grateful to you for all the grants you're giving and it's really an test text1 underline test t honor. [applause]. >> and what do you have in your hands there? >> oh, i wanted to show test text1 u the mayor some of my test text1 underline test texwork. >> okay. >> if you could pass that test t test text1 underline test text1 italics on. [ inaudible ] >> and test text1 underline gerald do you want to say anything? >> thanks, you all for coming, and thanks you all for giving us the money to help us out. we need it. thank you. [applause]. >> and thank test text1 underlineyou.

test text1 italics [applause]. >> all right. that's it for the program. i'm going to close it down. i do want to thank everybody that was here today and everybody from the city creativity explored thank you for opening up your home. i hope everybody checks them out on the test tex website, test text1 italics creativityexplored.org, and check out the amazing work we've got going on right here in san francisco. thank you, everyone. [applause]. essage cc1 test message test text1 underline test text1 italics cc1 test message test text1 underline test text1 italics cc1 test message test text1 underline test text1 italics cc1 test message test text1 underline test text1 italics cc1 test message test text1 underline test text1 . >> good afternoon.

all right. ladies and gentlemen, good afternoon. i want to welcome you back to the budget and finance commit re -- committee, the second installment of the day. before we get started i want to recognize linda wong who is assisting us with today's meeting. also at sfgovtv, we've got jessie and lawrence. and my colleagues. to my far left we have supervisor norman yee and to my right we have supervisor sandy fewer. madam clerk, are there any announcements for today? [ agenda item read ] >> supervisor cohen: okay. thank you madam clerk. do we need to take a vote to --

>> clerk: would you like to take a vote to excuse supervisor self aknee? >> supervisor cohen: yes, i would. to colleagues, i will put a motion out there to excuse supervisor stefani. thank you. that's been seconded by supervisor yee and we'll take that without objection. thank you very much. [ gavel ]. >> supervisor cohen: and madam clerk, would you please call item one. >> clerk: yes. [ agenda item read ] >> supervisor cohen: all right. ladies and gentlemen i cannot believe we don't have a full house on this one because today, we're hearing from the mayor's budget office and the controller's office regarding the fiscal health of our city and i can't think of a better place to be than here. so kudos to all of you who made it out here today. just to give you a backdrop, the controller projected a shortfall fore shortfall for the fiscal two

years. this report is indicating that the shortfall is decreasing now at only $140 million for the next two years. however these increased revenues are revenues revenues are largely one time in nature. the deficit is still projected to increase to $652 million by fiscal year 21-22, and this is driven been a increased projection in salaries and benefits, projected to increase 500% by 2021 and this will also makeup nearly 50% of the budget, so these are very important conversations that we are beginning today, and they will continue into the future. i think it's important that we think about these cost drivers as we head into the next fiscal season particularly if we were to add new full-time employees across all departments. with that i want to bring up

miss kelly kilpatrick from the mayor's office of budget who will be leading the presentation today. thank you. >> good afternoon supervisors. kelly kirkpatrick, acting budget director for the mayor. i also have michelle allersma from the controller's office to answer any questions that you may have during the presentation. the five year update called the joint report that we put out in december we have come out with a march revise to that and as supervisor cohen did a great job of priming everyone for we must balance the up coming budget by $137 million. the joint report and joint report update with a joint publication between the mayor's budget office the controller's office, as well as the budget

and legislative analyst's office. as a reminder, both in the december report and this march update we utilize a base case projection, meaning we take policies as they currently stand. no big swings in either funding or federal kind of policy changes? federal's just an example, and make our projections based on that. another large assumption is that there is no downturn assumed, so we just continue to assume status quo more or less? and where will we land knowing that status quo given some other cost drivers that are known entities. and in that realm includes revenue so the december report as well as march report assume that the economy is strong, but revenue growth is slowing and there's signs of growth constraints? for our projection purposes you know to forecast the deficit for the next four years, we do assume inflationary cost increases for personnel utilizing an average

from moody's and the california department of finance for open contracts so we can anticipate some salary growth? additionally we assume inflationary pressures on our knob personnel which assumes contracts in these assumptions, including the big ihss inhome support services worker's cost increases from the state that we've been talking with the board for over a year now. we keep getting refined information as the state develops their policies and procedures related to that. they shift, and also in the december report and this report is funding for the hall of justice exit plan. so this is the updated deficit for the next four years. as supervisor cohen mentioned, it's $137 million in the first two years, but as you'll notice there's still a really significant deficit in years three and four, reaching nearly over $600 million?

and i would say that, you know, the december numbers were marginally higher in those two years, and it's really this structural difference between the rising cost of our expenditures and the slower rate of growth of our revenues? the structural deficit is driven in some part as supervisor cohen said reliance on our one time sources. that's our biggest driver. it's over a $400 million difference between years two and three. we have ongoing pension obligations contributing to those out year deficit growth again e escalating ihss costs and revenue constraints. changing from the december report highlighted in our march numbers and driving kind of that two year decrease the largest is the addition of over $60 million of one-time fund balance as reported in the

controller's six month report for the current year fiscal year '17-'18. additionally when the controller's office put out the current year -- we say savings, but it could also be additional revenue, 'cause that contributes to that they also revised their revenue projections for the next four years, given current year actuals. they've revised it for the current year outputs. they've also received information from financial experts in the city to drive these assumptions? so there's higher than anticipated projected ongoing revenue, driven by property tax, business tax and hotel tax offset by some weakness in sales tax and parking tax? in emergency roomterms of salary and benefits our average of moody's and department of finance has been revised down modestly, so there are some savings related to that because

we include those in our salary and benefit projections. the largest safer other than kind of the drivers related to our revenue are pension assumptions? so in december, the revenue board updated some revenue assumptions as well as modelling, and that has realized a safer for us. then in terms of citywide costs, some highlights in terms of new costs that we're incorporating include replen replenishment of the compain fund given that we have a june mayoral election to meet the funding levels outlined in the ordinance. we are anticipating we will need to refill the election campaign fund given increased use of public funding for elections. additionally for ihss we have received more concrete, and i believe in january correction

correction -- direction from the state about how that will be implemented, so that's growing our ihss cost bringing just the two year increase in 18-19 and 19-20 to nearly $100 million more than we had anticipated last december at our five-year ---ed words the words are escaping me the title of this entire word -- five year financial plan. and then finally we do incorporate the annualization of current year models that have passed since december so that includes federal funding for dph that were funded through the federal, as well as $5.5 million of annual cost that went both to the public defender as well as the mayor's office of community housing and development to fund cbo legal

defense? and just some reminders what's still really present on our minds and what we think about, we look at these numbers from a financial perspective the one time sources bringing down that $137 million deficit? you know we still have significant structural deficit in those out years. again these numbers are predicated on no downturn or recession? it would be a historic anomaly if there would be no downturn on the four year horizon of this projection? we're in the third longest expansion since 1945. >> supervisor cohen: the third longest expansion of -- >> the economic expansion since 1945. >> supervisor cohen: so when you say economic expansion, you mean we have a really robust budget. >> meaning that the u.s. economy and the california

economy has experienced growth since 2009-2010. >> supervisor cohen: okay. thank you for the clarification. >> you bet. and then we face state and federal uncertainty that we'd be facing over $100 million from ihss cost shifts? you know we wouldn't have been able to predict that and it's a really big and significant cost to us. other pressures we're feeling or seeing on the horizon, we talked about in the federal select committee affordable care act. any changes to that could affect the city on a large front. we are a large purchaser of health care for all of our employees and retirees, so any shift in the city would be a cost we'd have to take on. additionally as it relates to our department of health expansion of medi-cal or medicaid as well as covered california, and california has helped 133,000 san franciscans?

if that were to be pulled from our residents, we might face additional costs as people would be looking to the city to provide health care and even the department of health themselves have received quite a significant revenue stream through the revised medicaid program? and then also something top of our minds is potential repeal of sb-1, which is the state gas tax? the department of -- department of public works has -- has budgeted $23 million for road repaving? that doesn't even speak to the mta's allocations of sb-1 for state of good repair which exceed over $30 million in their anticipated budget. >> supervisor cohen: i have a question about sb-1. i'm curious to know if you've heard from our lobbyists in sacramento. is there a report or update, and if i'm not mistaken that's going to the ballot in november . >> correct. the last that i'd heard there are signature gatherings still going on for that?

the last i heard, people thought it was likely that it would make it on the ballot? so we will keep, especially on the federal select -- we're growing it a little state, and we will keep you updated on that, as well. >> supervisor cohen: should this be successful in passing in november november that means a decrease. how much -- >> $23 million in 19-20. there's partial budgeted in 18-19. i'll have to fact check that and get back to you, but fully funded by the department of public works for road repaving. >> supervisor cohen: all right. thank you. >> and that concludes my presentation. if you have any other questions. >> supervisor cohen: yes. i think we do have a couple questions, supervisor fewer and then we'll get to supervisor yee. >> supervisor fewer: thank you very much. since you mentioned that we have revised employer pension contributions, and what is that amount? >> i don't have that offhand.

we can get back to you on the projected changes. i think i might have a chart, but -- hold on. so pension rates were the largest driver of the changes so -- but in total, our report there's about $20 million rolled up into salary and benefit savings in the first year of the plan and 29 million in the second year of the plan. it's not all pension, but that's all rolled up the cpi changes, as well. >> supervisor fewer: thank you very much. >> supervisor cohen: supervisor yee, did you have any questions? >> supervisor yee: yeah. can you go back to page three? >> yes. >> supervisor yee: just to get a better understanding of the numbers that are presented. so if i look at the sources and revenues and it's an increase of 235 next year, and then 510

following, and then it dips down again to 360 -- >> yep. >> supervisor yee: what's causing it to go up and down like that? >> yeah so that drop in the third year is related to the one-time sources, as well as perhaps some downward trend in the controller's ongoing revenue projections, but i would say the largest driver is one-time sources? yeah, it's fund balance going away. >> supervisor yee: oh, okay. and then in regards to the expenses i guess, it looks like there's a decrease for all four years, and that's built into the budget. is that why there's a decrease? >> sorry. didn't follow the question exactly. >> supervisor yee: i guess when you look at salaries and benefits for instance, each year there's a decrease. is that correct? >> it's an increasing cost.

>> supervisor yee: okay. >> sorry. that's -- the parentheses means it's a cost so it's an increasing cost. >> supervisor yee: yeah. i just looked at the top where it says in parentheses sources and then decreased. >> supervisor cohen: i have a couple questions. so what are the one-time sources that have decreased our deficit. >> so it's the fund balance which is current year either revenue better than budgeted or departmental savings and that has accrued over the last fiscal year -- and it's mostly revenue, better than budgeted revenue contributing to that. >> supervisor cohen: and where's the revenue stream coming from? is this property taxes? >> a large portion is revenue heath. i'll let michelle allersma speak to that. >> so in the six-month report we reported on the three driver's of the good news in that report are property tax

business tax, and department of public health revenue. property tax is largely the assessor continuing to work through their backlogs faster than we thought they would at the beginning of the year so they're enrolling -- enrolling higher values of properties that have transacted more quickly than we thought they would. that brings in supplemental and escape assessments in the short-term. in addition business tax, this is kind of base building good news from the year that just ended, so we -- we published our annual financial report in the fall, showing where we had ended the prior year. we incorporate those findings into our current year forecast, and so we ended last year better than we had projected, so that kind of bumps up the -- all the subsequent years, and then, department of public health is really patient rate revenue, and just continued --

i believe it's just continued faster than expected change between fee fore service service and kind of like cavitated rates. >> supervisor cohen: so is this year unique in having these three drivers in terms of revenue? no? i didn't think so. >> i think the thing that's interesting right now is that what's causing it so for property tax it's less a function of just the value of property changing as it is the pace as which the assessor is enrolling new values, so it has a lot to do with our operational administrative function in the assessor's office becoming more efficient and doing things differently and capturing the value that's available legally for us to capture. so that's kind of different in

the past couple of years than it has been over say, the past decade or two. so that's a little bit different. the other thing that's different that you don't really see on this list is that we have real anemic growth and sales tax which is kind of a bellwether revenue source for us because it's kind of the most immediate reflection of what people are feeling in their own lives and how they're choosing to spend, and that's very very flat. so i think those two things are a little bit different this time around. >> supervisor cohen: so i guess what i'm trying to understand is that is that unique or is that kind of like -- you've been working on budgets for a very long time now. is this a common occurrence, these drivers that you're talking about. >> i mean it's not surprising because these are our two biggest general fund tax revenues. it's probably not surprising they're driving the growth that we're seeing.

>> supervisor cohen: okay. okay. and so i guess my next question, i think it's going to be for you, can you explain the second to last line of the march update projection table, if you can. >> slide three? >> supervisor cohen: yeah i think it's on slide three, exactly. if there is he's a shortfall versus last year, how does that reconcile? how does that reconcile with the improvements of the $124 million that you've highlighted? >> can you state, sorry, your question again. >> supervisor cohen: sure. if you look at on page -- on slide three and you look at the second to last line -- >> the growth in cost expend -- >> supervisor cohen: exactly, the projected -- whatever it is the projected shortfalls versus the prior year see that

line? mm-hmm. >> supervisor cohen: okay. so if there is a shortfall versus last year how does that reconcile with the improvements of the $124 million that you highlighted. >> so you're saying last year at this time where were we? >> supervisor cohen: yeah. >> i believe last year we were at about 260 million? and so i think the big changes this year from last year are the two big drivers that we've highlighted are the increasing revenue, one-time fund balance, as well as the pension reduction since december has been a pretty significant cost savings for us as really -- as compared to of the la compared to last year. >> supervisor cohen: so hoe is theis -- how is the projected health improving? i understand it is but i want to understand why it is improving. >> i think it's a comparison from the previous year so we had anticipated very high cost

drivers for pension driven by three main factors related to supplement cal supplemental cola, less than budget returns at 7.5% for pensions as well as revising of our actuarial tables as well as those adjustment costs, and those changed made in december good the actuarial compared to previously feel better but it's still a significant cost. >> supervisor cohen: okay. so i want to talk a little bit about the project waiver agreement. i see that it's -- the costs have increased permanently and pretty dramatically in fiscal year 2019-20. i was wondering if you could just talk a little bit about why that is the case.

>> the 260 million? >> supervisor cohen: yes. >> so we assume for projection purposes cpi increases for open labor contracts and so seiu and the majority of our labor unions will be open in that year so we assume that inflationary costs. other drivers are pensions still, and what i haven't really talked about but it's still really important with our health care costs for employees. this report assumes nearly double digit cost increases for both active employees and 8% year over year growth just to pay for our current employees' health care and i think nearly 9% for retirees, and that's a big benefit for that salary and benefits line as well. >> supervisor cohen: okay. that was my next question, what accounts for the variances in the employee and retiree pension rates? but we have to adjust that at the retirement board.

people are living longer, the retirement costs are exponentially growing, and then what else? >> some wage increases projected growth. >> supervisor cohen: and then i think my last question, if you could talk about what's the cap it will expenditure rate in fiscal year 2019 and 20. >> so last year the mayor's budget included full funding for the capital year both in 17-18 as well as 18-19 so i think it was a combined almost -- over $300 million that year, and so we do -- we will have to figure out how much room we have in the budget whether or not we're able to fully fund in the second year of this so 19-20 in this capital plan and we'll work through it with a capital planning committee to figure out that funding level, but that would exceed 300 million, as well if we were able to fully fund that. >> supervisor cohen: thank you. i'm going to see, colleagues

do either of you have questions, if not we're going to go ahead and pivot to the bla. nothing? okay. perfect. thank you. thank you for this -- for the memo. you and mr. rosenfeld did a great job. we're going to hear from public comment. is there any member of the public that would like to comment on this item? please come on up. please come on up to the podium. you'll have two minutes. hi. welcome. >> hi. one suggestion. i believe you can increase consumer spending by reducing public transit fares offsetting the increased transit revenue with increased sales tax revenue, and you can survey the riders did heon the amounts they're spending depending on the time of day. also 60% of the public is in federal employment and they are

absorbing 50% of the budget and i was wondering if there's now a 2.2% unemployment rate if it would be better to eliminate under performance while there are so many job opportunities. also, i was wondering how accurate and reliable our department budget numbers can department heads depend on the figures they are receiving from their insubordinates and yeah the longest running economic expansion in recent modern history has led to global concerns in rising spending with -- [ inaudible ] >> -- russia creating satellites in neighboring territories and germany seeking to establish a european class of satellites independent of nato and the u.s. >> supervisor cohen: thank you