i am so lucky to live here. i am so grateful to my parents who decided to move to the city. i am so grateful they did. that it never . >> good morning, ladies and gentlemen. i want to welcome you back to the budget and finance committee. i want to thank our friends at sfgov tv who are assisting us with today's broadcast. madam clerk, are there any announcements?

>> yes, please silence all cell phones and he trek lonnic devices. speaker cards and any documents as part of the file should be submitted as part of the file. items for public comment will appear on the june 19 agenda. >> all right. thank you. let's call items one and two together. [agenda item read] >> supervisor cohen: thank you. i'd like to call mr. ben rosenfield from the office of the controller. >> good morning, madam chair, members of the committee. so items one, two, three, and four today as you're probably aware are interim budgets that the board of supervisors approves to maintain spending authority for the month of july while the full budget is still pending at the board.

this is a process in our charter. these are status quo budgets for that one-month period, and so it's typically been a fairly straightforward action to allow us to move aheo have that spending authority for that one-month period. >> supervisor cohen: that's it? >> be happy to answer any questions. >> supervisor cohen: okay. colleagues, are there any questions? any questions? supervisor yee, i didn't hear you. [inaudible] >> supervisor cohen: all right. well, thank you. we'll take public com. any public comment on items one and two? seeing no public comment, comment is closed. [ gavel ]. >> supervisor cohen: colleagues, do i have a motion to approve items one and two? motion seconded by supervisor stefani. we'll take that without

objection. madam clerk, please read the next [agenda item read] [agenda item read] >> supervisor cohen: thank you very much. we'll hear, again, from mr. rosenfield, and then we'll hear from miss kelly kirk patrick. >> these are the city's corpus budget for the month of july, interim budget. and then, items five and six will be the items that you'll have here in committee that incorporate the following 11 months here for the coming weeks, but again, items three and four are actions that the board of supervisors takes just to allow us to continue to pay bills and keep things going in the month of july while the full budget is pending. >> supervisor cohen: supervisors. supervisor yee? >> supervisor yee: so this is

the interim. and why did -- the dates are in june, so can you explain that? june 1 through june 30. that doesn't make any sense -- oh, i see. i see these dates. >> supervisor cohen: supervisor yee, can you ask a question? >> supervisor yee: is this for a full year or a month? i don't understand. >> the june budget is a duplicative of the one in front of you. it is only for july, and then the board by charter approves at the very end of july.

i believe the reference to june 2018, in the short title, which i think you're looking at, i think that relates to tran mission of the interim budget to the brgss which comes over from the mayor on june 1 of the fiscal year. it is effective as it says later, june 30, 2018 and june 30, 2019. >> supervisor yee: in your brief presentation, you talked about july 1 through end of july, and that's not part of this title, so i'm not -- maybe it's not important, but i guess for the records, i just want to make sure that we're talking about that month. >> it's absolutely true, what you're doing here is approving appropriations for the one month of july which will then be the subsequent action you'll take on the budget later. in the short title, this is just referencing the date that

it was submitted to the weres. so apologize if that is confusing. >> supervisor yee: okay. thank you. >> supervisor cohen: okay. thank you. miss kelly kirkpatrick, welcome. >> apologies for the confusion on my part. kelly kirkpatrick, acting budget director. i'll be giving a high level budget presentation, and i believe it should be for items five and six, and so happy to do that at that time. apologies. >> supervisor cohen: okay. all right. well, let's take public comment on items three and four. anyone? all right. seeing none, public comment is closed. thank you. [ gavel ]. >> supervisor cohen: colleagues, i'll make a motion to send this to the full board with a positive recommendation. is there a second? seconded by sandy fewer, and we take that motion without objection. [ gavel ]. >> supervisor cohen: okay. thank you. okay. would you please call items

five and six together. >> clerk: item number five, budget and appropriation ordinance appropriating all estimated receipts and expenditures for the department of the city as of june 1, 201 for the fiscal years ending june 30, 2019 and june 30, 2020. and item six is annual salary ordinance and he enumerating positions in and appropriations for the annual budgets for the fiscal years ending june 30, 2019 and june 30, 2020, creating or establishing these positions. >> supervisor cohen: okay. thank you. we're going to hear from the controller who's going to be presenting a revenue letter, and then we're also going to hear a budget update from kelly kirk dlt patrick. >> good morning, supervisors, members of the committee, chair cohen, thank you for having us. today my goal is to walk-through the high level policy proposals. i'll do a high level overview,

review how we balance and got to zero for the two-year budget, go over some other highlights in the mayor's budget as well as something to look forward in terms of the next kind of phase. so high level, the mayor's proposed budget is $11 billion in each fiscal year. that's $900 million more than 1718. that is attributable half to our enterprise department. they were close for two years, and highlighting their budget, it's largely one time revenues or capital driving that growth, so about half of the budget remains as general fund, we consider about $3.3 million to be nondiscretionary, and what we mean is there are voter mandated baselines and set

asides and voter entitlement programs that we act as something of a pass through. we consider 2.2 billion to be discretionary, but there's many salaries and allocated costs within that. key things of the mayor's budget i think align in strong part with policy hearings that you the board held this spring addressing homelessness and street behavior, committing to clean and vibrant neighborhoods, improving public safety and emergency response, as well as preparing responsibly for the future. i'll dive into details of those. as a reminder, our four year deficit when we did our last update with the joint controller's office and budget and legislative analyst, was approximately $137 million. we have balanced that as

charter mandated, and i'll walk you go how we got to zero in those two years. you'll notice in years three and four some persistent and tr troubling deficits for the city. we will do another update to our five year financial plan this coming fall. >> supervisor cohen: all right. and what can we anticipate, on i think june 25, i'm not sure if you are presenting or if ben is presenting. >> on june 25? >> supervisor cohen: yeah, june 25. >> yeah. madam chair, we typically, at the very end of june, part of what we'll do as the controller's office is continue to monitor trends what we see going on with tax revenues and other sources, and we typically complete a study at the end,

regarding what news we see. >> supervisor cohen: thank you. i can't wait for that date. >> so how did we balance the 137 million that was projected in march? on the revenue side, the nine month report had approximately $94 million of current-year either savings, but mostly it was additional revenue, and of that, the vast majority was revenue from the department of health, including two payments for medicare that we received in one year, and also patient revenue from more individuals having insurance, we reflect that revenue in our department as an ongoing solution. additionally, there is projected some ongoing nominally ongoing property tax growth. the roles are growing, but it is a finite role pool that we

will be pulling from, so that was a big help in 18-19 finite, so it is not continuing at that big of a level. and then we were able to constrain growth. f.t.e. growth citywide was about 1% 17-18. more than half of that was from our mta, a third of that was related to public safety as noted in the planned hiring plans, and then, the rest are for the targeted departmental enhancements, which i'll walk-through, but generally across the city it's about zero across the city for general operating departments. we make projections about inflationary costs and departments were able to absorb those, and then we have some savings due to capital project delays, both set savings and baseline transfers to enterprise departments, and

then, additionally departments helped the target. we did not take any target that would have any service impact, and the vast majority of the target that we did recognize was for the department of public health recognizing their ongoing revenue growth as noted in the nine month report. our highlights in terms of targeted investments outlines what i talked about previously, and i'll walk-through those in more detail on the next slides. so i do want to address the impact of proposition d not passing. so the ballot -- the budget had reserves on three new programs in 18-19 that will not go forward as a result of prop d not passing that includes rapid rehousing, flexible housing subsidy pool, enhancements, as well as a navigation center.

18-19 is balanced as far as those programs not going forward. however, 19-20 is not rebalanced. i will bn over the next week how we can -- >> supervisor cohen: i have a quick question about proposition d and i guess just the thinking of the mayor's office when it comes to budgeting. for what reason would you budget a positive forecast, as opposed to butting it would not pass, therefore, we wouldn't have to be spending time and energy during the rebalancing act? and the reason why i and had is because we did the same thing last year, as well, so why don't we just change that practice and not budget the proposition as if they were guaranteed to pass? >> that's a great question. i think we took -- we did take some lessons learned from j and k. we do not have to do any rebalancing for 18-19, and we

made very specific calls out for programs that will not start after prop d not passing. the mayor's budget makes certain choices, and i think as somebody who had wanted the measure to pass and the funding to come through, we budgeted with that expectation. however we revisit the second year of every budget, so we felt that having that impact via 19-20 was a process improvement from j and k. >> supervisor cohen: so just so i'm hear, it is a policy choice of the mayor. >> it is a policy choice. >> supervisor cohen: and how much effort does it take to rebalance? >> yeah. i think we have to work collaboratively. i think there's money from the mayor's budget. we hope it won't be as much as work as it was two years ago,

so hoping that we have some run way to help us come up with that programs, but it will definitely be a partnership and i'll be in strong touch with both of you. >> supervisor cohen: tdeto a rebalancing program, does that mean it can get cut, or do you pull from other pots of money to fill the projected revenue that you anticipated having? >> those are all areas that we could look to, so i'll have a better sense in the next week of what we could draw on. we try to avoid using one time reserves to the extent possible, so we'll definitely take that into consideration as we work with you on a rebalancing proposal. >> supervisor cohen: so i guess my question is, more specific, is it a policy decision? i would imagine this is a function of the budget office that is outside of the discretion of the mayor's

office when it comes to rebalancing the budget and where these revenues come from. how do you identify these sources of revenue? >> yeah. so we -- the state money is one that we're looking at that's come to light in the last week or two that we're circling around. >> supervisor cohen: and how much is that? >> right now, the estimates are about $27 million, but we have to work very closely with the department given there are kind of program attic parameters around the state's perspective as well as the timing of the funding. >> supervisor cohen: but correct me if i am wrong, i think the revenue that was projected for prop d so bring in exceeds the 27 million that we may get from the state. >> prop d was approximately 27 million annually for homelessness. in 18-19 there was 13 -- half of that, about $13 million that will not go forward as a result, and so that leaves a smaller kind of rebalancing for

the ongoing programs 18-19 not having to solve for the fall. >> supervisor cohen: and i'm assuming, because we have an $11 billion budget, that we have resources we can reallocate to fill. >> we are working that. i know it's a project for everyone up and down the hall. >> supervisor cohen: and when will you be reporting back to the budget committee and i get to the committee overall about the rebalancing plan. >> my goal is within the week. >> supervisor cohen: okay. great. thank you. supervisor yee has a few questions, as well. >> supervisor yee: thank you. >> supervisor cohen: yep. >> supervisor yee: it's pretty much along the same lines. i would have asked the same questions, why are we making the same mistake we made last year? and part of it, what's a little more disturbing for me is as a board, we created sort of a resolution to say these are some of the priorities that we want funded, and i can see that

some of it is in the budget, but the things that were in the budget that were our priority that we stated was based on hopefully prop d passing, rather than really looking at the budget seriously and saying, you know, something, we need to fund this, and you know, not take a chance that whether a proposition passes or not to get the funding. so in -- in my mind, if you're looking at rebalancing or if you're looking at -- it's almost like having to go back and look at the budget itself and say what the heck? you know, where do we get the 3.5 million for the navigation center if that's a priority, and not wait for this rebalancing or hopefully some state money will come through? so i'm really urging, and i'm going to be looking at those budgets to say, you know maybe this doesn't need to be funded

because this is not our priority, and hopefully, we can find some funding for all of these things actually have expressed strong support for. >> supervisor cohen: thank you, supervisor yee. appreciate your thoughts. supervisor fewer? >> supervisor fewer: yes, thank you, chair cohen. so i have to say that i concur with supervisor cohen that in the budget, it seems as though prop d, we should not have been depending on prop d as we actually have learned our lesson before. but my question to you is the 27 million that we are trying to negotiate with the state now, that is going to be -- that will then pay for the rapid rehousing, for the housing subsidy pool, and the t.a.y. gaf nation center, because these 27 million were earmarked for homeless

services, and these are homeless services that we will not be able to fund because prop d didn't pass. so i am assuming the 27 million will go to fund these three items that we're unable to fund. >> thank you for the question. we are actively working to under the parameters of the legislation, but we have identified these as priorities through resolutions as well as working on the budget. this conversation will evolve and evolve quickly over the next week. the priorities that have been stated, i'm open to hearing others, but i -- we're digging into the parameters of that state funding, what it can and can't be spend on, and the par a a -- parameters that it will need to be spent. we are evaluating the parameters, and we'll get back to you, but i recognize those

have been stated priorities. >> supervisor fewer: okay. so my specific question to you and to the mayor's budget office is, when the $27 million, when it passes through the budget -- i understand it's not in the phase to be passed, that these three things fit into the categories, and i would assume then that the budget for actually -- i guess it's the -- it would be under jeff kosinsky's team. >> we are working to comup with an allocation plan for that 27 million. i believe there are time constraints that it must be spent, but we are working with the department to develop and respond to the priorities as well as the timing of the funding. >> supervisor fewer: okay. it is just my concern that i

don't want that $27 million to backfill and supplant, it is really to supplement. and so i know a lot of times that we do our budget that we are supplanting continually, and that it doesn't mean that we're growing the program or helping more people. so when you are debating this and looking into it and examining it and evaluating it, i'd like you to keep that in mind. thank you. >> supervisor cohen: thank you. one thing. we spend a lot of conversation about prop d. let's talk about prop c. prop c passed. so did you budget for prop c? go ahead. >> sorry. prop c would -- is all net new programming, so that can be incorporated into the city's budget pending kind of allocation and specific funding plans for that? i would defer to the controller's office if there's any other questions about prop c and any priorities for that, but in terms of procedurally

how we move forward on that. >> supervisor cohen: okay. i'm -- >> supervisor yee: also -- >> supervisor cohen: just one more second. follow up question to mr. rosenfield. how does the passage of prop c affect fiscal year 18-19 budget and this projected net new revenue. will it manifest this year or will it manifest in fiscal year 19-20? >> i would suggest madam chair we have some discussions of c and d in our letters -- >> supervisor cohen: all right. supervisor yee, do you still have a question or on c and d? >> supervisor yee: i don't know about c, but it doesn't have to do with d. >> supervisor cohen: you and the voters. >> supervisor yee: first of all, for c, revenues aren't collected until the beginning of 2019, and most likely,

you're not going to be able to utilize much if any of the funding before the fiscal year is my guess. >> supervisor cohen: well, we'll get that confirmed in just a second. supervisor fewer? >> supervisor fewer: yes, mr. controller, how much revenue is anticipated from prop c for the fial year? >> supervisor fewer, our estimate of the value of proposition c is that on an annual basis, is would generate approximately $140 million. as supervisor yee has noted, though, the tax goes into effect on january 1, 2019. the normal payment date for that tax would be in march of 2020, so it would actually naturally occur in the second year of the two year budget would be the first year that you would see the full annual value of that. the question we're reviewing, and i know has been -- and discussing with both the city attorney and the treasurer's office if there are ways to

make estimated quarterly payments towards that estimated tax bill that would pull some of that revenue forward in the first year of the budget to make some of it payable effectively in march of 2019. so it's worth approximately $140 million in the second year of the budget. there may be revenue available in the end of the first year of the budget, and we're reviewing that and can report back to you. >> supervisor cohen: all right. thank you. do you want to finish with your presentation? >> be happy to. to the highlights of homelessness that i've put here are the 18-19 ones under our current plan slated to move forward, 200 units of newly constructed affordable housing in 18-19, doubling of the home ward bound budget. we will be opening four new navigation centers. we will be opening two access point, a tay access point and

family access point, as well as piloting a shelter at sfusd. i did also want to note through the d. ph budget, we are adding the street medicine team to augment their great work and also to continue the pilot of the antiopioid drug buprenorphrine. street cleaning, there's an anticipated large chunk of that is is in 44 new street cleaning staff, and a community corridors program, focusing on commercial corridors to be allocated in consultation with each of your offices? we are creating in the budget of soma clean program, which is modelled after the t.l. clean program with targeted cleaning in high impacted neighborhoods in soma? and then in terms of pit stops,

we're expanding the hours of pit stops and creating five new pit stops. and then, additional equipment for d.p.w. as well as piloting of the big bellies and cigarette ash can. >> supervisor cohen: that concludes your presentation? >> no. i just wanted to make sure there weren't any questions. sorry. i can go more quickly, but we -- the police staffing plan to get 250 more officers in the field over the next four fiscal years, as well as reform enhancements, fleet and equipment for the fire department, as well as a handful of really important diversion and accountability programs with the d.a., the public defender, department of police accountability as well as through the sheriff's department for the pretrail diversion program as well as enhancements, $8 million over the two years for a 911 call center to ensure that they have the staffing needed to meet the

90% of calls within ten seconds as well as a new ambulance response plan, fire department? >> supervisor sheehy: can i ask a question? >> supervisor cohen: yeah, supervisor sheehy. >> supervisor sheehy: we're hearing that the pretrial program is not fully funded in the mayor's budget? >> we were able to fund $1.5 million. i believe that they did have an ask that was higher, but we weren't able to -- with the competing priorities and limited sources, able to fund that. >> supervisor sheehy: and so do you know what that delta is? >> i can talk to you offline. i think it's about 600 k, but we'd have to talk to the sheriff's department. >> supervisor sheehy: okay. great. >> i'm almost done. >> supervisor cohen: we're not rushing you. please continue. >> some other highlights. of course we have a $40 million state and federal impacts reserve. we did a $10 million state and

federal impact reserve that was pretty much impacted by december. on the horizon for me that gives me the most heartburn and city stakeholders as wells the potential repeal of senate bill 1, the gas tax. from what we're hearing, it is likely that it will make the ballot, and likely that it will pass by california voters in november . if that were to be repealed -- if that tax were to be repealed for the general fund alone, it funds $23 million annually of our road repaving program, so over the next two years should that be implemented, it would be over $30 million just for the general fund. it doesn't take into account the money that -- >> supervisor sheehy: could i ask a question? >>. >> supervisor cohen: yes,

supervisor sheehy. >> supervisor sheehy: we've just gotten what the shortfall is in the care funds of 380,000. can i anticipate this federal reserve will cover that? >> it will have to be a discussion and have to be done as a supplemental if that were to -- this is unappropriated fund balance? so if it is he not solved in the month of june -- but the mayor's budget, we do not have the information at the time we submitted the budget in the last couple of weeks, that we are backfillng the c.d.c. as well as getting to zero. i believe c.d.c. is almost $1.7 million a year. >> supervisor sheehy: so the board needs to cover that with backfills? what is the plan? is this going to be the first mayor that has not backfilled hiv cuts from the federal budget? >> the -- >> supervisor sheehy: i would just like to know if this mayor is going to make this commitment or not. >> supervisor cohen: well, this mayor is on his way out

the door. we can deal with this committee. let me just give it a little context in terms of background. the board of supervisors has taken action to backfill through our legislative process. supervisor wiener has been a champion. we can position you to be that champion and make that happen because i think that's exactly where our values are. i don't want you to hammer kelly too much, and who cares. it's a figment of our imagination, like a bad nightmare. go ahead. >> we're additionally fully funding the capital plan pla. this is the first year we've been able to fully fund it. it's over 300 million in critical infrastructure projects. we are also funding a c.b.o. cola at a parate of 2.5 and 2.. the nonprofit sustainability

initiative which provides capital funding for nonprofits, and it's used to help purchase their properties due to cost increases is going to be funded at a total of $7 million, 4,000,003 million in the budget? we' the tax funding is anticipated to be over $10 million each year, after baselines, and the mayor's proposed budget allocates that. i'll back into health equity programs? we've also made investments at the department of public health. our investment through d.p.a., as well as department of human resources to address sexual assault and harassment both from an h.r. side for city employees through d.h.r. as well as nursing and other compliance staff at the department of public health? we're also reserving as we did two years ago for unknown labor impacts in fiscal year 19-20. we have only 26 labor unions

that will be open next year and we'll be negotiating with. and then additionally the budget assumes the continued growth of the dignity fund as well as the children's fund growth which in 18-19 is making its last large kind of growth to go from 3% to 4%. this is the fourth year, and we will finally get to the 4% of every $100 of assessed value? this is my last slide. i wouldn't be a budget director if i didn't keep kind of the forward looking warnings of our instruct well deficit, the timing of the economic cycle. we're in one of the longest economic cycles in modern history. as i noted we do have looming deficits over years three and four of the budget. we see lots of state and federal risks. i already outlined sb 1, and then potentially there's costs allocated to foster use at the state, as well as just a primer for december.

we're going to start working this fall on the five year financial plan with the controller's office and the budget and legislative analyst's office, and of course i'm here to answer any questions. >> supervisor cohen: thank you very much. very good. very, very, very insightful. i appreciate that. i peppered your presentation with my questions. i don't know if there's anyone else that has any questions. supervisor stefani, come on. >> supervisor stefani: just one quick question about the navigation center. how much does that cost approximately? >> once fully implemented, the cost is about $3.5 million perunit. >> and the risk to i.h.s.s. foster youth, how much is that each year. >> iible it's anywhere between 2 and $7 million. it has to do with the state's allocation plan about where individual foster youth originate and where they live to receive services and then

ensuring across counties that's allocated. san francisco has more going out of the county than coming into the county. for the ihss, i'll get the health care cost to you. >> supervisor stefani: thank you. >> supervisor cohen: thank you. colleagues, are there any other questions? no? seeing none, thank you very much for your presentation and your time. >> hello, again, supervisors. ben rosenfield, supervisor's office. the charter requires our avenues each year prepare what we call the revenue letter. we issued it last week. you have copies in front of

you, and i'll briefly run through some of our findings in this document. generally speaking we're reviewing and talking through the revenue assumptions that are in the budget. we're commenting on various other code requirements such as whether baseline requirements that have been approved by the voters have been met. there's a lot of information in the report. i'm happy to talk about any of it here today, but i thought i would hit some highlights given that you have a full day. at a high level, we work closely with the mayor's budget office on preparation of the revenue assumptions in the budget. generally speaking, they're consistent with our projections of continued economic growth here in the city and the country, but of slowing, so you'll see that as i talk through the tax revenue assumptions. for the most part, they're continued growth but with -- at a slower rate. miss kirkpatrick mentioned it.

the budget does have a halfy draw on fund balance, meaning the balance that's available from the current fiscal year. what that means is while the coming two years is balanced using that prior year source, that will create challenges in just beyond the budget view, and i think the last budget estimate that the three financial offices prepared estimated approximately a 500 million structural gap in year through just outside of the two year window, so worth highlighting. reserve requirements are met in the proposed budget. you've established a number of different financial policies, and those are being met, and i'll talk through the status of some of these reserves a little bit later. as kelly mentioned, there are two new reserves created. one, a $70 million for unknown labor collective next year, and then, $40 million that's been set aside for federal-state impacts. again as miss kirkpatrick

mentioned, the potential repeal of sb 1 on the november ballot being a significant one. voter required baselines are all met, charter measures in the proposed budget, and notably, funding for parks, children and transitional age youth that's appropriated in the budget exceeds those requirements, and i can highlight some of those amounts in a minute. some of the most challenging aspects, i think looking ahead through this month and through november here relate to the different ballot risks that we have. some that we've just crossed with the june election and some looking ahead to november . obviously, proposition d has not passed. $29.9 million of revenue is assumed in year one of the budget and 60.1 million in year two of the budget. those reserves will remain in

place now absent the mayor and the board modifying the budget to push money around and to develop an alternate plan. i believe the mayor's budget office is envisioning doing that in the coming week and coming to you with this process. there are two local taxes that appear to have passed that aren't in the budget. so we've talked a little bit about proposition c, the commercial rent child care that appears to have passed, again year two approximately $140 million value, and proposition g, which is the $50 million parcel tax for teacher salaries and other uses was approved by the voters with about 60% of the vote. that is a city tax, so those funds actually flow through the city on the way to the school district, and so ultimately those funds will need to be appropriated. those funds are not appropriated in the proposed

budget at the moment, so they'll need to be proposed apd at some point. i think the biggest highlight is the constitutional amendment that appears to be headed to the ballot in november . you had this on your agenda yesterday. there's a very significant curtailing of the ability of the local government to raise revenue. importantly, one of the provisions in that measure would invalidate taxes that were adopted in june by less than a two thirds vote, and so there is a risk if that makes the ballot in november , that both c and g would be invalidated going forward on this november ballot. lastly, the proposed budget in front of you assumes the passage of a dedication of hotel taxes that supervisors peskin and tang have introduced and is pending at the board of

supervisors for voters' consideration in november . it would restore historical linkage between the city's tax. this is an alternative to proposition f that failed to get the two thirds vote a couple of years ago. that's pending at the board. so those are a couple of the highlights. as you know, the budget has grown to over $11 million in front of you, 11.1 billion in the first year of the budget, 11.2 in the second year. when we take a look at some of the key drivers sitting under tax revenues that are assumed in the budget before you, and there's much more discussion of these in the report itself, so i'm happy to answer additional questions, but this shows you kind of the shape of some of the major taxes that we've seen in recent years, and the projections in the future. so business tax, we are

anticipating continued strong growth in business taxes driven by both wage and employment in the city. we've seen that consistently through this boom period, and we do not forecast declines or slowing growth in business tax during this period. some other taxes, though, have been more middling, so we are expecting hotel tax, which has been flat and even modestly down in the current fiscal year, we are anticipating that will rebound in the especially with the opening of the moscone center, and then notably transfer tax. we talked about this some months ago. we've seen a significant decline. the budget assumes some moderation and continued decline but as you can see in

the shape here, basically entering a historical norm period. if you review the growth rates as percentages, this is showing you some of the highlights on this chart again. i'd suggest that probably the most meaning -- if you're kind of looking for the order of growth, this chart is probably the most helpful. you can see that those are positive numbers importantly for both property and business taxes, our two largest general fund revenue sources. we've forecast continued strong growth of almost 5% in property tax in the budget year and very strong 8.5% growth in business taxes in the coming year. some of the other smaller taxes that we have, parking tax, hotel tax, and then, of course transfer tax, as we do expect them to be roughly flat or even in the case of transfer tax, modestly declined from the current year level, and again that's just the continuation of

trends that we've seen in the current year. the abnormal number on this page is the 358 growth in stadium at mission tax in year two, so it's a reminder that the warriors arena is expected to open in the second year of the proposed budget. >> supervisor cohen: do we have hard figures about what these assumptions would be? do we know? >> i don't have them at any fingertips, but we certainly do, and i'm happy to share them with the committee members after the meeting today. >> supervisor cohen: okay. thank you. >> in the report, we comment on whether the budget is compliant with various adopted charter measures. generally speaking, the budget -- well, the budget does fund all mandated charter

spending requirements, and in a couple of cases funds additional revenue or additional expenses above and beyond what the voters have required. the children's baseline is a -- funded at a level that's approximately 5 million more than is mandated in both years of the budget. the transitional age youth baseline, which is a component of prop c the voters adopted a couple of years is funded at a level that's about 7 million more than what the voters mandated it as a minimum expenditure, and then rec and park is mandated at a higher level than what the voters mandated. other than that all other voter mandates are funded at the level that the voters required and not in excess of it. the report does include a lot of information regarding kind of what the status is and proposed deposits and used of different reserves are, so it's towards the end of the report. this is a summary table that

highlights some of that. generally speaking, the budget continues to fund an increase in general reserve, which is a requirement of the adopted financial policy. there is a moment we're neither making deposits to nor making money from our financial reserves, and then we have a host of other reserves which you can see at the bottom of this table and highlighted below. i'll highlight a couple here. we talked about the state and federal risk reserve, 40 million, the labor cost risk reserve in year two. the board has also authorized the creation of a budget risk reserve. this is to manage some of the volatility in public health revenues that we've talked about in recent years given the affordable care act and others. we have a very large

disallowance that we've been notified of by the state of almost $59 million related to funds received in a prior year. it's kind of what this reserve is here to do, and so you can see there's a very significant expected drawdown on that reserve in the budget as we make some of these big disallowance payments. and so the good news is we have the reserve to buffer that loss. the bad news is now that reserve will be declining. i think it's always helpful to think about these reserves in the context of what we think a recession is likely to look like, so the left bar here indicat indicates an approximations what a typical recession could do to revenues here in san francisco. so about a $1,100,000,003 year problem is one way to think

about the challenge of a recession. you can see we've filled up about half of that with solutions on the right when you see the reserves that are in place, so it leaves a shortfall that would need to be solved of 517 million in reserves in the case of a recession. the last issue that i wanted to highlight briefly because this is relatively a new one for us, and it doesn't affect the two year budget in front of you, but it is the year after likely. it's the state constitution, there was a voter initiative adopted many years ago called the gann limit that basically created an appropriation limit that local governments could not spend more than a certain amount of money as determined by a complex formula the voters adopted, and if they did, we would have to make adjustments. we'd have to issue tax refunds, shift money to infrastructure, go back to the voters to ask for an override to this

somewhat artificial calculated limit. the revenue growth the city's seen in recent years means that the amount of room between our appropriations and what the gann limit sets as our ceiling has been declining, and you can see that here. this is the orange line, how much room we have declining significantly. this includes new voter adopted taxes that have been adopted in recent years. so a couple of changes to the transfer tax and others. those includes a temporary override of gann. but all that's permitted under state law is a temporary extension. at that point, it would appear that we'll be in excess of the ga 2 gann limit, which would require the city to go back to ask the voters for an exemption on the gann limit. we'll keep you updated on that.

>> supervisor cohen: how long has the gann limit been around? >> oh, '79 or thereabouts. it dates to about proposition 13. jarvis and howard were the two big sponsors of prop 13, and this dates to about that same moment. >> supervisor cohen: thank you. supervisor stefani has a question. >> supervisor stefani: just a quick question. does the gann number apply differently to san francisco since we are a city and county as compared to other counties, and we have more responsibility? >> i think the calculation definitely looks different for us as a city and a county, but it globally applies to city and counties throughout the state, and it actually applies to the state itself, and the state

itself has had conversations that they are frustrated with the gann level. given the boom we've seen, this is an issue that's going to start rising around the state so it's not unique to us. what's unique to us is probably the level of revenue growth we've seen over the past few years which means that phase is growing quickly. that concludes my presentation. happy to answer any questions or follow ups that the committee might have. >> supervisor cohen: colleagues, any questions for mr. rosenfield? supervisor yee? okay. okay. so thank you for your presentation from ben and kelly kirkpatrick. i appreciate the information. just want to recognize that the budget legislative analyst has done some thorough analysis, and they will be reporting to

us next week. is that correct? is there anything that you heard that you want to comment on today? no? okay. we'll save it for next week. at this point, i just want to give a brief overview of what the budget process will look like through the next two weeks. today we'll hear each department present their budget as indicated by mayor farrell. no comment will be taken on the budget today or tomorrow. on monday, june 18, we will hear a full day of public comment on the budget proposal. we will begin at 10:00 a.m. in this chamber. on next thursday and friday, that's june 21 and 22, we will appear the proposed revisions to those departments made by the budget and legislative analyst's office. final cuts will be made on june 25. again, that will happen in this chamber, also starting at 10:00 a.m. as you know, this year, i have been in the process of

reforming the budget process, particularly what is affectionately known as the add back process. it is my goal to make this process more fair, more transparent, and quite frankly for policy driven and policy oriented. we have posted a public list on the budget committee's website of all the funding requests that we have received. i want to encourage everyone to take a look at that list. historically, the list has been held in captive, held in captivity and not shared largely with the public. you can go to sfbos.org/committees and -- but then go to budget and finance committee, click on the budget information and look on the link titled fiscal year 18-19 funding requests. i want to encourage everyone to also -- we've got some nice charts up there and -- for all of you budget nerds and

aspiring budget nerds, it's a lot of good information. this is an effort to reform our process and be above board and be transparent. so i invite everyone to ensure that their requests have been heard and are reflected in this document. we will revise it as additional requests come in. this coming friday, june 15, i will introduce a policy level spending plan for any additional -- any additional funding, and that spending plan will be informed by m colleagues on this committee. it will be based on budget priorities identified not only by in committee but identified over the last few months. just as recollection, you may recall that we have a relatively conservative spending plan as it will be too soon to know exactly how much money we have, additional funding that we have available to us to allocate.

but again, these spending plans are, again, policy level. as the board of supervisors doesn't wish to interfere in department level autonomy in programming spending. the public will have an opportunity to comment on the spending plan during public comment day. again, that's going to be on june 18. comments and responses from the board of supervisors are due to my office by june 20. so any of my colleagues, not just on this committee but other members of the board of supervisors will also be able to comment on this spending plan, and that deadline is june 20. on june 25, i will introduce a revised spending plan that will reflect the feedback that we have received from my colleagues as well as from the public, and of the b.l.a. cuts to the department. on that day, i invite colleagues to join me in the chamber to comment and to deliberate on that spending plan. again, this is part of the process that historically has not happened in open session.

on wednesday, june 27, this body will amend the policy level spending plan in this committee. i hope to finalize deliberations by 7:00 p.m. wednesday, june 27. so that is the final day that we will be hopefully concluded with our spending plan. we anticipate putting funding for new program extensions on reserve so that departments will be able to come back to us in september and let us know how they believe that program funding should be allocated. again, this is a tool that this body has the ability to use and to exercise, and that is to ensure that departments aren't spending frivolously and that there's a plan and that there's a well thought out budget associated with their spending priorities. so i hope that you will agree that this is a more transparent and policy focused process, and i look forward to everyone's close involvement. i specifically want to acknowledge department head staff that have been instrumental in helping us pull

this together and also my legislative aide, sophia kitler who has been the point person on this process. just want to say thank you, sophia in the back of the chamber. thank you for your help. if anyone has any questions, comments or complaints, please see sophia. thank you. all right. that was a mouthful. all of these dates are going to be published on the website so that if you need to refer back, that it is available to you. now, moving on, we just wrapped up items five and six. now we are going to pivot and go into the highlight of the day, and that is our department presentation. just as a reminder, everyone, please remember to keep your presentations to five to seven minutes. we will dive in after your presentation with more thorough and thoughtful questions. first, we're going to hear from the san francisco unified school district. i believe ben rosenfield's going to be presenting on this.

with you heard this two weeks ago at the may 30, presentation. all right, ben, you're up. next after ben, we'll hear from the civil service commission, michael brown. >> you are correct, madam chair, the -- what the appropriation that's noticed here today is a small appropriation that's required under state law to fund the county office of education, which is a small piece of the school district. it's just a small statutory allocation. the majority of the funding that we allocate to the school district flows through dcyf on the way to the school district. i think they'll be presenting later this week, and if you have questions regarding school district funding, that's probably the best place to speak to it. >> supervisor cohen: all right. thank you. does that conclude your presentation? all right. appreciate it. colleagues, are there any questions for mr. rosenfield? if not, we'll keep moving on.

ben, i just wanted you to know that presentation was about 30 seconds. you're going to get a gold star for that. next we a're going to hear fro the civil service commission, mr. michael brown. they are focused on providing fair and equitiable opportunities for all current and prospective employees for the city of san francisco. it's particularly focused on implicit bias in hiring. the total budget if i'm not mistaken is $1.3 million. let's see: of that 1.3 million, 1 million is for salary and benefits. the floor is yours. welcome. >> so good morning, supervisors, and malia, and also, the controller's office, and it's been a pleasure to serve with the civil service commission. this may be my last year.