please stand by

>> this is may 13th 2020 regular budget and appropriatations committee meeting. i'm sandra lee fewer, chair of the budget and appropriatations committee. i'm joined by committee members [inaudible]. our clerk is linda wong. i'd like to thank sfgovtv for broadcasting this meeting. any announcements? >> yes, madame chair. due to the covid-19 health emergency and protect board

members, city xwraoeps and the public, the board of supervisors, legislative chamber and committee room are closed. however, members will be participating in the meetings remotely in the same extend that they were physically present. public comments will be available for each item on this agenda. each speaker will be allowed two minutes to speak. comments are opportunities to speak during the public comment period available via phone call by calling 888-204-5984. access code 3501008 and then press pound and then press pound again. when you're connected, dial 1 and then 0 to be added to the queue to speak. you'll be lined up in the system in the order you dialed 1 and 0. while you're waiting the system will be silent. the system will notify you when you're in line and waiting. all callers will remain on

commute until their line is open. everyone must account for the time today and speaking discrepancies between live coverage and streaming. best practices are to call from a quiet location, speak clearly and slowly and turn down your television or radio, or you may submit public comments in either of the following way. e-mail me at linda.wong@sfgov.org. if you submit public comment via e-mail, it will be included in the legislative file as part of the matter. written comments may be sent via u.s. postal service to city hall. to room 244, san francisco, california, 94102. and madame chair, this concludes my announcements.

>> madame clerk, please call item number. >> yes, related updates for fiscal years 2020-2021 and 2021-2022 and requesting the mayor's office of public policy and finance and the budget and legislative analysts to report. members of public who wish to provide public comment on this item should call the 888-204-5984 and press pound and then 0 to line up to speak. >> thank you very much. you may remember that this is the long-awaited megareport on the state of our budget. and so today we have kelly from the budget office and ben rosenfield. >> thank you, madame chair. and members of the committee. i'm ben rosenfield, city controller.

i can start the presentation, ms. kirkpatrick, as portions of it as well and where available for the committee, either during the presentation or afterwards. as you psychiatric, madame chair, it was about a month ago, a very long month ago that the three financial officers authorized [inaudible] and presented our march projections early in the days of this emergency regarding our expectations for financial impacts on the city. earlier today, it is now available on the web and each member of the committee has a copy of it. woe produced updates of those projections. so, our may outline, our may projections. so we're here today to summarize some of that information for you. and take questions from you. very briefly, we'll walk through the current year shortfall projections and then those for the next four fiscal years. ms. kirkpatrick can then talk

through projections of covid spending in revenues both for the current year and some preliminary thinking regarding next year and beyond and then i'll conclude with some discussion of risks and uncertainty that can continue to be incredibly present at the moment to close the presentation. so with that, to get to the bottom line of it, in march we had project add range of revenue losses that we expect to occur during the current and upcoming two years. that is the period for which you're now plan ago two-year budget. in march, we had developed both a more limited impact scenario and more extended one. in our update, though, we've set it out by a single number of $1.7 billion and we'll walk you through those details. in a nutshell, the $1.1 billion

estimate before and the more limited duration scenario really corresponded to a v-shape recovery followed by a quick rebound and given the world as we know it today, in our greater understanding of both the health and financial risks ahead of us, that no longer feels like a credible scenario to our offices. so, we have a single projection which we will walk through and a unfortunately it's at the lower edge of what we previously expected. starring with the current year, here's an update on our tax revenue projections for the fiscal year ending in just a couple of months now. you can see here that property tax good news that we anticipated earlier in the fiscal year and continues to be driven by enrollment of prior

year bills, supplementals and escapes by the assessor's office and continues to be strong. that's been somewhat off set recently given our interpretation that we'll lose penalties and interests and some other revenues in the current year that will affect property tax. property tax remains [inaudible]. the other numbers on this page are much worse. business tax is down approximately $200 million by the close of the fiscal year. that is being driven by both our expectations that businesses will begin to pay their quarterly payment at lower level, give than economic slosz occurring in the private sector as well as deferrals of certain fees and taxes. so, we see the loss here and the business tax numbers that we'll talk about later assume that we receive those funds in the current per. the single most impacted industry in the city, and that

corresponds to our tax revenue loss as welt is hospitality and that translated into a sharp loss of hotel taxes. $150 million on weakness versus the adopted budget. almost all of that in one quarter. so hotel taxes went from being worth $100 to $140 million a quarter in the assumed budget, we will be lucky to receive $20 million in hotel tax in the current quarter. and most of that will be attributable to the period before shelter in place took place in mid march. parking taxes and sales taxes are very weak. and then all the other local taxes, some are up and some are down, about 1.4 million. so, that leaves us with a current year tax revenue loss of $335.8 million. our latest projection. obviously that is only one piece. that is the revenue -- tax

revenue piece of the outlook. and there's obviously much more details in the report itself regarding what's going on with different departments and tax revenue streams and baselines and other things and to summarize it here, this is kind of where we expect to end the current year in the general fund overall. we started the year with $294 million in fund balance after the adopted budget, taking our local tax revenues and other tax -- other revenue losses worth viewing in the current year. we lose about $436 million versus budget baselines with shared in good news and also shared in bad news and that means that general fund contributions to baselines that have been adopted dekleined by approximately $308 million. we do see department spending savings, which is in the report of $123.7 million. the majority of that was captured in the six-month report. prior to the pandemic.

but there is additional savings detailed in the report related, broadly speaking, to slowing spending in the current fiscal year given the obvious challenges and hiring and those sorts of things in the current environment. that means we would expect to end the year with about $85.5 million in fund balance. which is about $246.2 million worse than what we had assumed in january. and so i know the mayor's office has indicated they intend to submit a rebalancing plan for the incoming weeks. at this point, that is a number they're solving around and ms. kirkpatrick can speak to that. so, i will turn it over to ms. kirkpatrick as we move beyond the current year and then talk about the outlook for the next several. >> thank you. as the controller outlined, the -- our office intends to submit a rebalancing plan for the

approximately $250 million of current year shortfall. by the end of next week to the board of supervisors. and just want to highlight and walk through the remaining shortfalls that will have to confront in the upcoming budget process due to, in large part, the revenue losses that the controller outlined. but there are some expenditure changes as well that i'll walk you through. but all that to say that, for the upcoming two-year budget, we now have a $1.5 billion projected shortfall compared to about a $400 million deficit that we had published in january. the significant cliffs in the final two years of projection grow as a result of a loss of one-time fund balance, that one time money we applied to two budget years are helping to bring those costs down. but those sources aren't available and our projections are in the final two years and

that is why it grows in the outer years of the projection. here's a bit of detail. underlieing that high-level rollup that i just showed you. you'll see the budget shortfall. the numbers match the previous slides. $215 the current year. about $700 million in each of the two budget years, resulting in $1.7 billion of which the upcoming budget will have to close at $1.5 a billion. the general fund sources revenue is the biggest loss cost it feels like and the upcoming projections. some changes since march include additional revenue losses at the department of public health. which noticeably are driven by slowed revenue from medi-cal patients as well as lexive

medical referral due to the pandemic. we assume that loss is one time in the first year of the budget and then resumption of the department's ongoing revenues by various state and federal waivers compared to prior years why those look like losses in the outer years and there is also other small revenue losses projected, notably the a.s.p. to the general fund as well as loss sb-1. that is our state gas tax that helps with road repaving so we project revenues by lower revenue down below and there's other departmental revenues. and we assumed some losses there as well. contributing to the steeper decline than prior projections. baseline savings. that is to the fund it feels

like. contributions were driven by the slowing revenues, but i do recognize that that means less money for those service areas so notably the city's three biggest service areas that receive baseline funding include the m.p.a. and children's services, noticeably decyf and oecd as well as library and rec park. changes in salary and benefits include both the wage delay that was triggered as of our march 31 report. a savings of almost $43 million. in the first year of the budget. but because it's a wage delay and not a wage freeze or cancellation, it just pushes that cost out into the fiscal year 2021-2022. that savings in the first year is off set by increased cost

for projected active and retiree health care that's providing health insurance will be more expensive in the years going forward. and finally, there is increased pension cost over the projection period. we assume current year losses due to the poorly performing stock markets and this is compared to for projection purposes in all years. we assume 7.4% return. if i could project the stock market, i wouldn't have this job. so, that is our best projection purposes and we'll feel that loss again in actually the second year of the budget and that is fiscal year 2021-2022 and salary and benefits feel so steep. changes in city-wide operating costs are related to increases in lease and operating costs for city-owned facilities.

there's holdover issues related to 30 van ness that will droiblt the costs to working with real estate in light of the current economic landscape to see if we can bring down costs by the time budget rolls around. and then we feel the offsetting expenditure savings and that will go road repaving. the departmentstal operating costs, the biggest increase in costs are notably due to changes and this is from march, i'm noting. changes in our entitlement programs, including cow works and cap due to increased enrollment as well as the termination of -- i'm going to get the terminology wrong, but due to changes at the state level to be responsive and

supportive of these low-income residents, there's no termination period on benefits. people will continue to receive them, which is helpful to residents, but feels like a cost to continue to support that. there's other assumed minor changes from mosconi, due to reduced convention center activity as well as some adjustments to the buffin projections that we made earlier in the year. next slide. thank you. the next kind of piece of financial puzle that we spent some time working with departments and the controller's office on, just doing our best attempt at projecting. i think uncertainty is definitely a key issue that we're confronting but trying our best to provide estimates

and bookends just to help give a sense of order of magnitude. so, based on current spending to date, as well as projected spending by departments through the end of this fiscal year, we are estimating about $375 million in direct covid spending by departments. now i know i've been coming to you weekly with this slide that is -- that has been highlighting the budget actual, which is checks cut and out the door. this is a projection of that forward-looking spending. the departments are forecasting based on commitments they've made, leases they've signed, contracts they're pursuing. so that is why this number is over $300 million. the two biggest areas that i'll walk through on the next slide for covid spending should come

as no surprise but it is health care spending to be responsive to the medical needs and prevention needs from the community in the health care lens and alternative house hoing makes them a significant portion of that. we do assume fema reimbursement, which is currently 75% as well as cares act funding. on the next slide,ly walk you through a kind of much more detailed break out of the spending areas and those sources that are known at this time. based on these estimates, we will largely spend down our cares act allocations by the end of this fiscal year and we really wanted to that a lens, too, as we're thinking about the up coming two-year budget. what are some potential costs for covid spending with various variables around state and

federal aid that we should be thinking and planning for. even if potential additional state or federal resources come to fruition as, you know, there are discussions in washington to that effect. but there is downside risks in terms of fema reimbursement, depenting on actions taken by the federal government in terms of the duration of the emergency declaration. i think -- yep. go ahead. i think i covered what i intended to. so we've highlighted four main areas of response. as i noted earlier, the health system costs are projected to be about $1807 million. if we assume fema reimbursement, that would leave about $45 million in local costs remaining. the main spending areas within

this category the biggest is personal protective equipment, p.p.e.ablable disinfect tanl, other cleaning and prevention supplies. these are both purchases to protect our hospital staff as well as frontline workers across the city. union workers and we're working essentially with the city administrator's office and d.p.h. to procure and distribute p.p.e. across the city. but this is a significant cost both now and projected to ensure that we can mitigate the spread of the virus in our health care settings. and in our essential work that must continue. there is also significant spending projected and incurd due to medical staffing both planning for an ability to surge our nursing capacity as needed as well as overtime for medical staff. we assume the medical staff costs will be ongoing.

but, of course, all of this is really will be shaped by the shape and evolution of the virus over the next year and the shape of the curve. we have medical transport testing in these costs. not included in these costs are a contact tracing unit which is definitely under way. we have the department of public health leading existing efforts and plans for the next year. the reason they're not included is they are working through a kind of projection for the next year. but i do want to note that that could be additional cost here as well. simply, for shelter and housing, the vast majority of those costs, i would say 75% of them, are for all of our alternative housing. this is for 7,000 rooms, but i

have in the report we provide the cost of 8250 rooms that would cost as well. and we assume reimbursement levels in alignment with the vulnerable population that fema will reimburse for. and this includes the cost of meals, supplies and staffing at the hotels. since the last discussion with hotels at the board, h.s.a. has endeavored to estimate the cost of adding nonprofit staffing in addition to workers that might have changed the nightly room rate from the last reporting. the number is included here. for emergency operations and staffing we have included newly incurred staffing cost and overtime expenses for public safety employees. staff at the e.o.c., our

clinics and testing sites as well as the cost of overtime for the department of public works to maintain clean streets. this includes technology services as well as emergency child care centers and providing meals for children of first responders. the reason why this cost is higher is that when there are certain expenses in here that are not fema eligible, our understanding is that the child care centers are not currently female reimable, but we'll have other sources to help support the programs that are not fema reimbursable. and i wanted to highlight the number of programs that the city has undertaken. half is related to food security and meal delivery programs. one thing that i didn't nik wallenda my presentation, but detailed in the report is that the call for fema and others

include philanthropistic or dedicated funding to date to committed state reimbursement. so, for the meal programs, the state has agreed to match and part for the great plaits delivered program so there is a small local match on that one. we also include the variety of programs for seniors serving community organizations, home delivered meals, grocery supported through give 2sf and other grocery purchases. we also wanted to outline the various small business programs and trying to support undocumented and extremely low-income familieses is outlined in the report as well and finally in terms of sources of funding that will help us offset some of these net local, potential local costs.

most notably is $150 from the cares act a. state and local government am allocation that can offset incurred costs and cannot offset lost revenue and has to be sent by december 2020. other allocations in here include $16 million of hud funding or cbdg and a e.s.g. as well as hopwa and other developmenttal-specific allocation include aging and disability services. the state has commited to $7.4 million to san francisco, through project room key, of which $6 million is formula driven to offset costs related to helping individuals who are homeless and pay for other housing programs. all this to say, given these assumptions of projected costs, assumed fema reimbursement, state and local aid and

philanthropistic funding, that leaves a $40 million balance of sources to help pay for costs beyond july. what are some projections for the next fiscal year? again, these are all our, you know, wanting to give, sense of order, of magnitude, the arc of covid in the community and the next fiscal year will really shame our costs, the scale and design of city programs will also determine the ultimate costs we will incur. but we need to flex up or flex down. if we're able to flex down from our current response levels, as i noted earlier, we assumed fema reimbursement at 75%. but that is dependent on the foed ral state of emergency being in place and there is potential tlifk should the president decide to end the emergency or due to political pressures that might jeopardize

fema fundingful on the other side of that, though, too, our report does not assume cal o.e.s. matching fund which is in the past have been 18.75%. so should those funds to feds match that, that would help offset some of that local match as well. and then, of course, there is the uncertainty of potentially additional federal aid to local governments. i was just listening to the governor at his lunchtime press conference talking about even at the state level, the importance of federal support and that conversation is just kicked off with the house democrats introducing a bill yesterday and provided significant relief. but obviously it has to work its way through the house and then the nondemocratically controlled house but rest assured we recognize the importance of these efforts to secure federal funding and we'll try to do our best and

encourage you all to recognize that importance. what we are trying to demonstrate here is if costs that are considered ongoing -- hotels, p.p.e., health testing, health care staffing, some level of e.o.c. staffing were to continue, the exact same right for the next year, and we apply the cares act balance and use 75% fema, that could be up to $500 million of additional cost and perhaps we can ramper down our response efforts and say we spent at 50% of what we are projected to spend through the end of this fiscal year. the same kind of methodologies, about $200 million. if we spend at 25% of our current spending rate projections, up to $90 million. as anoted, there is upside and downside risks to all of this. these costs will obviously flex

and change as information changes. but all this to say that these expenditures are not included in the current year shortfalls. wherever they land, should they be over and not offset by state and federal sources, these would be added to the deficit on whatever level they end up as being. with that, i'll pass it over to the controller. >> thank you. to briefly end our presentation, the two most striking things to me regarding the situation, is number one the speed and rapidity in which the city's revenue base has eroded and then, secondly and perhaps more pronounced, is the incredible level of risk and uncertainty that faces us financially and otherwise looking forward. these are really fundamentally things that could alter this

projection predominantly to the worse but we'll talk about places where it could be to the good. as we continue to update you about this and keep informed about the city's financial health. the first, of course, and that drives all of this is duration of the public health risk that continues to exist in san francisco and throughout the country past july 1. there is a risk here that we'll have a slower or later recovery than assumed in our projections. we talked a little bit about here about the level of the city response that will be required to be sustained in coming years. those numbers that she talked about earlier are preliminary rages. -- ranges. they are not in the projected shortfall.

i'm not the right speak tore speak to the duration and intensity of the public health risks in the time period after july 1. but here's a simple depiction that many of you may have seen from the ?r of infectious disease that speaks to the longer trajectory of covid as they understand it and see it in the longer term. so here we're talking about a two-year period, essentially and they're building these off past experience with other infectious diseases like the flu. that first scenario on the left, in all these cases i should say were on the far left at this point of these charts but it is really what is the art of the disease going to look like going forward in san francisco in the state, the country and in the world. and there is great uncertainty about that. we know that covid-19 will continue to be present in our community until there is a vaccine or herd immunity is developed if that is even

feasible and that will be some time. so we have different scenarios of peaks and valleys, the scenario, too, is one where we have a -- we have improvement this summer and you see an actually worse outbreak later in the fall. and then our goal really to get to scenario number three, which is a slow burn managing the disease in our community from intervention while doing what we can to return to the economy and our social state, a new normal. but that will be with us for some time. so which of these scenarios we find ourselves on is we go obviously has a profound effect, not just on city services and broader society in san francisco but on our finances as well. that is the first and most pronounced risk and we'll don't live with this uncertainty, i think, for the next -- through the coming fiscal year.

related to, -- related to that, as i said earlier, we're no longer expecting to see a rapid recovery, but we expect and project in these numbers that a recovery does begin late in 2020 and continues through the forecast period. the risk dove tailing off the previous slide is that additional public health interventions or rollbacks were broader economic dislocation that results from kind of the -- our current state. it means that we have a slower recovery than we're expecting here. we have about 3.8 million and makes up our local tax revenue base. and these are in our general fund to that dynamic. on the right are just two simple number are what would it look like if the world is 5% worse than what we're projecting here and what would it look like if we're 10%?

those are credible scenarios if we find ourselves having to retrench the next fiscal year or we see things worsen rather than improve. that is a tlaifk we should all be planning around. and aware of. kelly talked earlier. the key question is what level of city response will be required in future years. we now project to spend approximately $375 million in the current year and that will be largely covered by other nongeneral fund revenue sources. we also know that n doing that, we're largely depleting the cares act allocation that has been approved by congress thus far, which will mean spending next year will be more exposed. but departments are working as we speak and i think these will be the key choice made by the mayor and bore in the coming year budget. what will spending levels look like in 2021 and beyond for the

hospital system, for testing and contact tracing, temporary housing and shelter, and other strategies a. key unknown to us at this point. and then the last major risk relates to losses of federal or state revenue. so we've made no assumption here regarding loss of either federal or state revenue. on the federal side, the downside risk here is, as kelly talked about earlier, is the national emergency will be declared over at some point. at that point, fema turns off as a revenue source to reimburse the very significant cost of you will likely don't incur 678 it is unknown when that will be. but it is a risk there. we remain hopeful that we'll see additional federal aid packages. the democrats in congress have are sbro* deuced the heroes act.

the next proposed stimulus bill that would provide significant relief to local governments. but we just don't have any certainly at this point. and we'll don't keep this committee updated as we continue to look at what is going on with washington. on the state side, kelly mentioned cal o.e.s., and they match fema and provide additional revenue for us. we're hopeful that will occur. when it does, we will include those revenues in our forecast going forward. additionally, a bill has been introduced in congress. ill would push the stay's reimbursement to 100% if it's approved and i'm assuming that's the reason the state hasn't enacted it because they're pressuring the feds to

get to 100% reimbursement on the costs so that the state doesn't have to bear it. the last three major hurricanes in the u.s., ultimately congress approved 100% reimbursement so we remain hopeful for good news on that front. however, the kind of other big looming problem for local governments is the state budget itself. so tomorrow the governor is scheduled to release his may revised propose told the legislature which will then have to adopt a budget by june 15. the state now faces a very large budget shortfall of their own. $54 billion is their estimate. of revenue losses they expect to incur in the current fiscal year and upcoming year. so we face significant risk of reductions in revenue coming from the state. all tolled, federal and state revenue makes up 20% of our general fund. so, these are significant risks

and we'll don't keep the committee updated as we know more. with that, we will stop talking and take any questions that you might have. >> ok. colleagues. >> so, can i -- >> yes. absolutely. how do we figure out how to budget -- balance our budget what you just said. [laughter] seems like the simplest thing is to look at this year's first. can you go back to -- just for clarification, in terms of rooms, the rooms for 2019 and

2020, and you talked about the 7,000, 8,000, whatever it was unit interest and how you projected. did you -- did you make your projection according to the maximum number of rooms times foush months or something like that, three months? how did you do that? >> yeah. that is a great question. we worked very closely with h.s.a. staff and we -- they proud us with the projections of their spending to date. and their ramp up for the last, i want to roughly say two months. and then for the remainder of this fiscal year, assumed reaching that 7,000 is the number here. in the report, we also provide additional cost of should we reach the 8200, what that additional cost would be as well. and then as we showed for the

next fiscal year, we just assumed 100%, 50% and 25% based on that modeling, we didn't do an exact room breakdown, but for the current year it was the ramp up we've done so far in assuming the 7,000 and provide 8,000 in the report as well. >> so you're saving for the rest of may and june that we would have 7,000? no. ok. >> no. the model is basically a week by week model looking forward as we continue to climb up the [inaudible] so by the end of the fiscal year we get the room targets that ms. kirkpatrick mentioned. >> ok. that's good. that is a maybe.

from today that we'll have 7,000 rooms. the other question i had, you talked about child care a little bit, that cost. and we're paying for some of it. isn't the state reimbursing most of the child care costs? >> it was my understanding that there is a program perhaps to be determined, and let me follow up with you on that. for a certain set of workers, but recall off the top of my head but we can get that detail to you. >> what was the assumption then? that they wouldn't reimburse anything? >> that the majority was not reimbursable was our assumption. i don't know if ben recalls better than i do. >> my memory, and we can report back to you is that the 0 to 5 child care being offered is largely being either reimburred by the state or absorbed within

existing budgets. it significantly relates to the child care services being provided by the rec and park department, which is not reimbursable turn state program. but we can get you the breakdown of both of those programs. >> yeah. it's not that i have a lot of information. but i know for 0 to 5, it seems like that was going to be covered. >> that is my understanding as well. >> if there is other people who have questions, [inaudible]. >> all right. supervisor? >> thank you, chair fewer and thank you so much for the presentation. just -- i guess my first question is do we have any indication of when cal o.e.s.

resource will be available? is there an estimate and timeframe so local municipalitis can do some form of projection? >> caller: we have talked to the governor's office, supervisor walton. their focus at the moment is on pressuring the federal government to cover that chair. so i remain hopeful that either federal government will pick it up and if they don't, at that point, the state will active -- activate but i expect them to pressure the fed dos do it. >> let me ask a different question. if some reason the feds do not provide the level of support that the state is asking for, do we know the support that we get from the state without the federal 100% reimbursement? >> if past history gives us a

guide, if fema only reimburses to 75%, the state would match the 18.5%, leaving us with about 6%. the risk that i am concerned about would be that the federal government doesn't meet the state's request to go to 100% and the state faced with its own overwhelming budget problems would not activate the local match and leave that for local governments. so i just -- we don't have clarity on it at this point. >> my last question, from a historical standpoint, have we seen a crisis where the state has come through with some level of reimbursement? >> i'm not aware of a natural disaster in the past that the state didn't ultimately active vaits their local match. it's also true, though, that the state has never had a disaster that was simultaneously active at every local government.

no. i think they have always matched in past emergencies. >> thank you. >> any other questions, colleagues? >> yeah. sorry. i should -- i'm too slow at typing my name. on slide seven, when you started talking i kind of got lost with what these numbers mean. for instance, like the salaries and benefits. on the users side. are you saying for 2021 the number looks like it would be --

>> $125 million. >> that an increase? decrease? i wasn't understanding that. >> yeah. sorry. i live in this table and i apologize. i recognize that it's not intuitive to folks who don't live and breathe budget every day. this table is a complaining the prior year. the three biggest components of that are wage increases, pension costs and they're all three increasing compared to the prior year. this number is slightly lower because our larger projections triggered something that was agreed to with our labor unions

so we're pushing cost out of fiscal year 2021 and the reason why fiscal year 2021-202 feels so large is that we're pushing that wage delay. >> ok. i think i got it. >> and additional pension costs weighs briefly on the current year and we'll feel two-years from now in the second year of the budget. so basically it's in terms of a negative here. the 125. it's really an a increase that causes a bigger deficit. >> yep. you got it. >> at first i didn't quite understand that. >> parentheses in the financial world mean negative or costs. >> any other questions? colleagues? if not, i have a few questions as well. i want to thank you for the presentation. i note that we just received this presentation so i'm

expecting that next week we'll have more questions about it. but on page 8, i see that there are significant deficits in some key departments, namely public works, h.s.a. and rec and park. and significant surpluss in other departmentses, namely police, sheriff, war memorial and [inaudible] a. there are details on the following page. but can you share more with the committee about the origin of this deficit? >> sure. let me pull up the report if i could. >> and chair fewer, can you remind us on which department you highlighted? >> sure.

there's significant deficits in some departments, juvenile probations, and significant surpluss in other departments through h.s.h., war memorial and human resources. so, just a little bit more detailed about it. >> absolutely. go ahead, ben. >> you were on page eight of the report. >> yes. >> at a high level, this shortfall, a juvenile probation is almost entirely driven by delays in claiming federal and state revenue. grants that they have available. we reported this at the six-month mark as well. that number is coming down and i have a team of accountants that are assisting with that effort at juvenile probation as we speak.

it is a function of their financial capacity there. they went through the summer with very little capacity in their finance shop. i'm hopeful, as we say in the text below, that they will be able to [inaudible] and 0 in the current year. in juvenile probation, that is partially off set by salary savings. they had a number of vacancis that have gone unfilled and they have some good news on the expense side leaving a $3.2 million debt. >> [inaudible]. >> so you are expecting that to zero out. >> we're working hard to get that to zero. as of now, this is the projection for the end of fiscal year. >> ok. >> public works is predominantly driven by revenue loss related to the current

revenues for other programming. it's basically stopped in the current fiscal year. given shelter in place so that's dr*if and majority of their revenue loss. wi expect them to be on the expenditure side. >> got it. >> and remind me the next department you were interested in? >> sure. h.s.a. >> sure. so, for h.s.a., it's on page 10 of the report. there is a i believe that summarizes some of revenue and expenditure differences for their various program. most of the revenue loss here is related to changing levels of state reimbursements that are formula-driven for various programs they offer. so, lower matching for foster

care and some of the general operating expenses that you see in that left column. they are coming in under budget on the expense side. but the participation of the feding and state with their programs is coming in lower than that. leaving that net-net problem. for rec and park, the majority of the revenue shortfall you see is really driven by, again, by our current public health emergency. we project approximately $11 million in revenue losses for the departments. that's almost entirely amid cancellation fees and loss of facility rental fees, a lack of golf programming. some of the other department services that generate revenue. so all of those activities -- those revenue generating activities have stopped and that's led to a very significant shortfall in this

most recent quarter and we do have some staffing and salary savings given the issues they have that's partially off setting that leaving them with a $9 million problem. >> you never see surpluses and i see [inaudible] explained, for example, the police departments, sheriff, that we are seeing significant surpluss in other departments that [inaudible]. >> yes. we're counting on savings in places you see it on those tables. for general pressure you see across the city at the moment that is resulting in salary savings is hiring slowdowns and that is driven by the fact that it would be technically hard to hire anyone in this circumstance, remotedly.

and not filling positions quickly or filling them at all so you see surpluses in a lot of places in the error. >> ok. and then i realize that the mayor's office is working on a new rebalancing plan for the fiscal year. but can you share whether services will be [inaudible] are par of the immediate actions that you are looking at. >> for the current year rebalancing plan, we are -- some of the savings you noted in this report has brought it down to the $250 million to all of those departmenttal revenue and savings have us at $250 million. our goal in the current year is to identify savings that will mitigate any service layoff redunstings and looking for capital savings, freezing. freezing of capital that's funded by cash. if there is any debt savings in

the current year and also looking to programs that haven't started. but we can pause and sweep those savings right now. those are really on the priority list for the current year. >> and the mayor's office [inaudible] directed nonessential hiring, is that right? do you know how many vacant positions this applies to and how many salary savings in the current year is [inaudible]. >> any vacancy projections for the rest of the current year are captured in the nine-month report. so, the controller was noting we're assuming that they will be captured in the end of year departmental savings. i don't know how many vacant positions they currently have at the moment. but we could follow up if that would be helpful to you.

>> yeah, it would be. >> i have some revenue questions. it looks like we don't expect a significant impact on property tax and the biggest impact we expect is sales tax and transfer tax. can you share a bit more about the tax and revenue picture in the coming two-years? >> i would be happy to and there is additional information in the report let ne get to the right page that i can point people to. and especially in moments of this, we want to be careful in outlining our assumptions. they begin on page 25. there is a table that shares --

shows tax revenue detailed by revenue stream in the current year. and then the next page has it carried forward into the budget years. and then there is the text beyond that that speaks to the specific assumptions. generally speaking, kind of the economic picture that stood under all of these is one as i described. it's no longer a v-shaped recession. it is a current year assumption that the losses we feel continue into the early parts of next year and then we begin to see some recovery across our different revenue streams next year. our property tax is holding up well in the current year. we expect to see fines next year. and there are values involving the longer term.

business tax, there's a lot of inputs to what drives our business. but probably the single largest is represented to next year as kind of what's the underlying dimunition in payroll. across the board here, if memory serves, this assumes about an 8% decline in gross receipts and payroll across our entire business tax space. versus the current year. that is our current estimate, looking to cross industries. we'll know more as we get additional employment information and see what is happening in months ahead by the time we're back to you in august a. we should have a fuller picture. but that is our current assumption that's under this and then some recovery beginning in years after.

hotel, you can see on page 26 that we are assuming $163 million in hotel tax revenue next year which is less than half of the hotel tax that we have assumed in the current year budgets. so we took a steep loss. we know that the hospitality industry will be one of the slowest to recover. but we do expect here or project here some recovery in hospitality beginning next year. of all of the revenue streams, this is the one that we're keeping our closest eye on and i see the most downside risk in. but the future of air travel, convention and business that drives hospitality may need to further losses above and beyond those that we have assumed here. and then if that's deliverable information you were looking for? >> yeah. that helps.

and we ref received this and there is a lot to it and there's a lot of charts and reading and i expect next week that we'll have so many questions. but i do have one more question. obviously we know that our local businesses are struggling. you know, right now. retail, restaurants. but it has been categories of businesses and do you have an analysis with regards to business taxes? so, within those categories of businesses? >> we're definitely making specific assumptions about different rates of loss in different industries and we can share some of that with you. they're based upon pretty early information. but i can say we know that losses in hospitality, for

example, hotel, catering, restaurants, have been immediate and very steep. so losses in those industris are getting much sharper than, for example, office work. or technology. or professional services. those parts of our jobs that have continued to operate with losses, but not at the same level. largely remotely. so, we can certainly provide some more information about our thinking, about which parts of local economy are comparatively healthy and less healthy at the moment. >> yeah. that would be helpful. thank you. why don't i call for public comment and see if any members of the public would like to comment on this. again, commission -- i mean supervisors a little bit more time to digest the report. so let's call for public comment on this item. are there any members of public that would like to comment on item number one? >> madame chair, operations is checking to see if there are any callers in the queue. please let us know if there are

callers that are ready. if you have not already done so, please press 1 and then 0 to be added to the queue. for those already on hold, please don't wait until you are prompted to begin at the beep. >> madame chair, there is no one wishing to speak. >> oh, really? ok. well, public comment is now closed then. colleagues, anymore comments or questions at all? seeing none, i'd like to make a motion to move -- continue this item to the call of the chair. do i have a second? >> second. >> thank you very much. roll call vote, please, madame chair. >> yes. on the motion -- [roll call]

>> thank you very much. so i'd like to thank the controller's office and the mayor's budget office for all of their work that they put into this. there is so many unknowns and i think there will be time to read through the report. it is very comprehensive. i think that a lot of work and effort went into this and i know that we're on sort of a short timeline for this. but this is a really good first snapshot of what we're dealing with. so i want to thank you very much. for all your work on this and i'm assuming that every single supervisor received a copy of this. all right. madame clerk, is there anymore business before us today? >> there is no further business. >> ok. we're adjourned. thank you very much.

>> it did take a village. i was really lucky when i was 14 years old to get an internship. the difference that it made for me is i had a job, but there

were other people who didn't have a job, who, unfortunately, needed money. and they were shown to commit illegal acts to get money. that is what i want to prevent. [♪] today we are here to officially kick off the first class of opportunities for all. [applause]. >> opportunities for all is a program that mayor breed launched in october of 2018. it really was a vision of mayor breed to get to all of the young people in san francisco, but with an intention to focus on young people that have typically not being able to access opportunities such as internships or work-based learning opportunities. >> money should never be a barrier to your ability to succeed in life and that is what this program is about.

>> there's always these conversations about young people not being prepared and not having experience for work and if they don't get an opportunity to work, then they cannot gain the experience that they need. this is really about investing in the future talent pool and getting them the experience that they need. >> it is good for everyone because down the road we will need future mechanics, future pilots, future bankers, future whatever they may be in any industry. this is the pipe on we need to work with. we need to start developing talent, getting people excited about careers, opening up those pathways and frankly giving opportunities out there that would normally not be presented. [♪] >> the way that it is organized is there are different points of entry and different ways of engagement for the young person and potential employers. young people can work in cohorts or in groups and that's really for people that have maybe never had job experience or who are

still trying to figure out what they want to do and they can explore. and in the same way, it is open for employers to say, you know what, i don't think we are ready to host an intern year-round are all summer, but that they can open up their doors and do site visits or tours or panels or conversations. and then it runs all the way up to the opportunity for young people to have long-term employment, and work on a project and be part of the employee base. >> something new, to get new experience and meet people and then you are getting paid for it you are getting paid for doing that. it is really cool. >> i starting next week, i will be a freshman. [cheers and applause] two of the things i appreciate about this program was the amazing mentorship in the job experience that i had. i am grateful for this opportunity. thank you. >> something i learned at airbnb is how to network and how important it is to network because it is not only what you

know, but also who you know to get far in life. >> during this program, i learned basic coding languages, had a had to identify the main components and how to network on a corporate level. it is also helping me accumulate my skills all be going towards my college tuition where i will pursue a major in computer science. >> for myself, being that i am an actual residential realtor, it was great. if anybody wants to buy a house, let me know. whenever. [applause] it is good. i got you. it was really cool to see the commercial side and think about the process of developing property and different things that i can explore. opportunities for all was a great opportunity for all. >> we were aiming to have 1,000 young people register and we had over 2,000 people register and

we were able to place about between 50 and did. we are still getting the final numbers of that. >> over several weeks, we were able to have students participate in investment banking they were able to work with our team, or technology team, our engineering 20 we also gave them lessons around the industry, around financial literacy. >> there are 32,000 young people ages 16 and 24 living in san francisco. and imagine if we can create an opera skin it just opportunity for all program for every young person that lives in public housing, affordable housing, low income communities. it is all up to you to make that happen. >> we have had really great response from employers and they have been talking about it with other employers, so we have had a lot of interest for next year to have people sign on. we are starting to figure out how to stay connected to those young people and to get prepared to make sure we can get all 2400 or so that registered.

we want to give them placement and what it looks like if they get more. >> let's be honest, there is always a shortage of good talent in any industry, and so this is a real great career path. >> for potential sponsors who might be interested in supporting opportunities for all , there is an opportunity to make a difference in our city. this is a really thriving, booming economy, but not for everyone. this is a way to make sure that everyone gets to benefit from the great place that san francisco is and that we are building pathways for folks to be able to stay here and that they feel like they will belong. >> just do it. sign up for it. [♪]

[it. >> shop & dine in the 49 promotes local businesses and challenges resident to do their shop & dine in the 49 within the 49 square miles of san francisco by supporting local services in the neighborhood we help san francisco remain unique

successful and vibrant so we're will you shop & dine in the 49 chinatown has to be one the best unique shopping areas in san francisco that is color fulfill and safe each vegetation and seafood and find everything in chinatown the walk shop in chinatown welcome to jason dessert i'm the fifth generation of candy in san francisco still that serves 2000 district in the chinatown in the past it was the tradition and my family was the royal chef in the pot pals that's why we learned this stuff and moved from here to have dragon candy i want people to know that is art

we will explain a walk and they can't walk in and out it is different techniques from stir frying to smoking to steaming and they do show of. >> beer a royalty for the age berry up to now not people know that especially the toughest they think this is - i really appreciate they love this art. >> from the cantonese to the hypomania and we have hot pots we have all of the cuisines of china in our chinatown you don't have to go far. >> small business is important to our neighborhood because if we really make a lot of people lives better more people get a job here not just a big firm.

>> you don't have to go anywhere else we have pocketed of great neighborhoods haul have all have their own uniqueness. >> i'm rebecca and i'm a violinist and violin teacher. i was born here in san francisco to a family of cellists, professional cellists, so i grew

up surrounded by a bunch of musical rehearsals an lessons. all types of activities happened in my house. i began playing piano when i was 4. i really enjoyed musical activities in general. so when i was 10, i began studying violin in san francisco. and from there, i pretty much never stopped and went on to study in college as well. that's the only thing i've ever known is to have music playing all the time, whether it is someone actually playing next to you or someone listening to a recording. i think that i actually originally wanted to play flute and we didn't have a flute. it's always been a way of life. i didn't know that it could be any other way. >> could you give me an e over here. great. when you teach and you're seeing a student who has a problem, you have to think on your feet to

solve that problem. and that same kind of of thinking that you do to fix it applies to your own practice as well. so if i'm teaching a student and they are having a hard time getting a certain note, they can't find the right note. and i have to think of a digestible way to explain it to them. ee, d, d, e. >> yes. then, when i go on to do my own practice for a performance, those words are echoing back in my head. okay. why am i missing this? i just told somebody that they needed to do this. maybe i should try the same thing. i feel a lot of pressure when i'm teaching young kids. you might think that there is less pressure if they are going on to study music or in college that it is more relaxing. i actually find that the opposite is true.

if i know i'm sending a high school student to some great music program, they're going to get so much more instruction. what i have told them is only the beginning. if i am teaching a student who i know is going to completely change gears when they go to college and they never will pick up a violin again there is so much that i need to tell them. in plain violin, it is so difficult. there is so much more information to give. every day i think, oh, my gosh. i haven't gotten to this technique or we haven't studies they meese and they have so much more to do. we only have 45 minutes a week. i have taught a few students in some capacity who has gone on to study music. that feels anaysing. >> it is incredible to watch how they grow. somebody can make amazing project from you know, age 15 to 17 if they put their mind to it.

>> i think i have 18 students now. these more than i've had in the past. i'm hoping to build up more of a studio. there will be a pee ono, lots of bookshelves and lots of great music. the students will come to my house and take their lessons there. my schedule changes a lot on a day-to-day basis and that kind of keeps it exciting. think that music is just my favorite thing that there is, whether it's listening to it or playing it or teaching it. all that really matters to me is that i'm surrounded by the sounds, so i'm going top keep doing what i'm doing to keep my life in that direction.

>> 5, 4, 3, 2 , 1. cut.

>> we are here to celebrate the opening of this community garden. a place that used to look a lot darker and today is sun is shining and it's beautiful and it's been completely redone and been a gathering place for this community. >> i have been waiting for this garden for 3 decades. that is not a joke. i live in an apartment building three floors up and i have potted plants and have dreamt the whole time i have lived there to have some ability to build this dirt. >> let me tell you handout you -- how to build a community garden. you start with a really good idea and add community support from echo media and levis and take

management and water and sun and this is what we have. this is great. it's about environment and stewardship. it's also for the -- we implemented several practices in our successes of the site. that is made up of the pockets like wool but they are made of recycled plastic bottles. i don't know how they do it. >> there is acres and acres of parkland throughout golden gate park, but not necessarily through golden community garden. we have it right in the middle of