the budget analyst contract, the capper, and our labor costs make it 93% of our department's budget. the remainder is about $800,000, and i will commit myself to looking in every corner to look for potential cost-savings, as we have in prior committee direction. now to turn to the guidelines. the charter provides that the clerk will have charge of the legislative record, classified staff, and the office. the draft budget will anticipate the boards similar number of files needing to be processed. a. current number of standing committees that will comply with did demands of the requirements and generally hold the current -- clark's death and the sources constant while reviewing for cost savings, reorganization opportunities. finally, i would appreciate direction from the committee. if it is different than what i plan to put in the draft budget, which is the configuration or allocation of resources as it pertains to the 22 legislative aide positions. otherwise, you will see it as it currently is. that concludes my presentation to i am here to gather any additional guidelines or take back

as the general city budget instruction, the enterprise -- we have had a very tight budget with the water sale for charles -- shortfalls, going over to waste water. the item before you later will be the power rates. with the decrease water sales environment, they're telling department heads to target a flat operating budget. and you will see in our budget, the budget was going up each year for the current year, but $38 million is the planned service for the water program going on line. it was relatively flat save for that service, and the french benefit cost increase. the entire city has 27 bargaining labor contracts after the renegotiation, and the expiration of the 12 floating furlough days, and this came with the additional cost that we have assumed in the budget production -- budget perception. we really do want your input, on a couple of key items. one of them is how to look at the proposals that come before us, and how to present to view the proposals that will be coming for you in january and february, and what it will mean for us in the first item, with proposition a, which we ask

it would also get the budget analyst time to reflect the changes in the budget analyst report, which i think will be useful as we continue to talk about the speed of at the end of the day, we will be able to make improvements through the amendments to change the financial picture for the city and to provide additional guarantees that strengthens this deal that we would be able to consider. but with regards to the process and how it came forward, that will ultimately be a policy called for the board. and i understand that part of it. there's nothing you can do to kind of change the way that this transaction came to us. i understand that a but i think we should spend some time to ensure that we're submitting, at least on the financial component, the strongest language and the most tight package possible. so i would request that we continue this item to january 4. that will provide supervisor mirkarimi -- that will be his last meeting. but he can be part of that, given that he is the sponsor. and it will give the department of to make sure that this information provided to us is complete

let me go back to the overall budget. i think this squares well -- i was thinking about the costs -- that are fixed and what is variable or discretionary, within the budget. it seems a lot of the staffing is fixed, and you kind of need the. it is not like you will not staff a treatment plant at three in the morning. but in terms of what is a choice, things like chemicals. i was focused on chemicals recently. we spend a lot of time on chemicals, but some of these are for -- what if we had a program to relate a lot of different things here, on the grease removal devices, and if we got more grease removal devices in the field and were able to take more food waste out of the sewage stream, so there is last suspended solids that tend to create odor problems and require treatment chemicals, if we invested $10,000 in something like that, if this is not a capital project. this is more of an operating project and there is a cost avoidance implication. the extent to which the staff can do some work on that chemical world, for the bu

current year to balance the budget. at the high level, good news on the revenue side of 75 loss of one time revenue. the big problem continues to be on the expenditure side. this is the bottom line for fy12, 13. predicting $52.7 million shortfall. for the following year, 13, 14, a shortfall of three of $75.3 million. this is the first time we're doing a two-year projections. the second year number is a cumulative number. this is a change from where we are right now in the current budget. to the extent we saw that for the first year with ongoing solution that brings down that second year deficit, which emphasizes the boards of taking on going action to balance the first year. >> with " -- supervisor chu: does the general fund deficit assume any power increases, given our current topic? >> yes, based on conversations with busey, there is an assumption of the one-cent increase over the year. to the extent we can work with the puc to bring that down, we can talk about that in the next item and next meeting. that would help t

we can -- we can balance the budget. while i'm pleased that my democratic colleagues have a balanced budget amendment, the alternative they offer does not address this heart of the problem. it does not include a spending cap to ensure that we move spending to an acceptable level. it does not include a requirement for a supermajority to raise taxes, which will allow proponents of tax increases to more easily work to balance the budget on the backs of the american taxpayers. and the american taxpayers are only 49% of the people working right now. the american people are not the ones who cannot get spending under control. they should not see tax increases simply because congress can't do its job. we need to pass the hatch amendment and pass it now because i must remind my colleagues that passage of a strong balanced budget amendment is a first step. if we pass a balanced budget amendment, it still must be ratified by the states. three-fourths of the states have to pass it for to become a part of the constitution. that will t

months as we see the results of the state and federal budget processes. all but two of the city's labor contracts are open for negotiation this spring, so there are 27 collective bargaining agreements, and the outcome of those negotiations will have a significant impact one way or another on the $263 million budget deficit. our budget is due on february 21 to the mayor's office, and we will begin to meet with staff, stakeholders, the community in january to solicit input on our budget proposals. we will be in front of this commission on january 19 and again twice in february to make the budget presentation, and then we will ask for your approval of our budget's mission at the second full commission meeting in february. i am more than happy to answer questions. >> is there any public comment on this? commissioner buell: margaret, we're not quite done. we have a video. a product of our work force by one, started out in our san francisco state internships. she has done an amazing job. she put together about 60 in the last two years. we have a great partnershi

we would expect the rates would be set by the middle to end of january so that we can prepare our budgets based on those. because of that, now, or at the end of -- whenever we go to the process today, should you have thoughts about how you would like to see us bring forward a rate increase, we will look to hear them. we would hope not to bring a rate increase for that would be vetoed by the board. supervisor chu: i know that we want to move on the agenda, but i just want to comment, with regards to be able to increase the rates, i think a rate increase that is being proposed, whether it is two since, four since, it is substantial for us and the general fund, given that we pay the 3.7 cent per kilowatt hour rate. we understand it is a lower rate than the cost is. i think the general sentiment that i have is we probably need to start picking up more of the cost to allow for hetch hetchy and the power program to be more successful. i am very concerned. i would like to make sure we are not to believe impacting our budget. we know we have a budget deficit in next couple of years, so we want to

instructions for the 2012-13 budget. in first i wanted to mention, in terms of revenue, we have separated the revenues that are four charges for service from the revenues from the mou's which basically include bit transbay joint power authority and the court, and we have projected to have more revenue throughout the year, so this is an actual plus protection. so far we have 43.8 in terms of the budget, and we have 42 -- 52.2 percent signed of the budget for the regular charges for service. one of the things we do look at and have started to look at is what the changes are in terms of valuation of issue permits, because that is a measure of how well we are doing. and we are actually, when you look at a year over year this year versus year to date last year, we are seeing an increase in valuation of issue permits of almost 43 percent signed, and we provided a sketch will in the report that shows the level of valuation in various ranges and the number of issue permits. we're still seeing a large increase in permits, especial

going to be equal players in the budget process they needed to have their own budget agency as opposed to relying on numbers that came to the executive branch and that is the reason for the cbo. >> i think it has been phenomenally successful in its success is measured by the fact that if you talk to most people in the media and indeed most honest with you on both sides in the audio of congress they would say the congressional budget office are released concerning the budget probably has the most credible numbers most credible information out there and that was not a foregone conclusion. it wasn't something that necessarily wasn't destined to happen and if you had said to someone in 1974 okay we are going to create a nonpartisan agency in the middle of the most partisan environment imaginable, is that going to work? i think an awful lot of people would have said no. that was made to work and i think they worked hard on making it work but i think on that is where they certainly must. >> what is the cd go's mission? >> this tdo's mission is to provide nonpartisan information on the econom

it is a matter of how they can fit them into the budget. we are all hoping that an economic recovery helps the general fund growth over the next few years. that is yet to be seen. commissioner moller caen: -- president moran: a lot depends on how the mayor rights his budget instructions in. if they anticipate this increase, it may be shocking to the budget as a whole and the mayor's office may have to think about that for a while. as far as individual departments, it would not necessarily upset their efforts. >> there is also one mutually beneficial issue here that the mayor's office and the board will appreciate. you have asked staff to present to you so that we can satisfy our reserve requirements. if we do have a hydroelectric facility go off line, a powerhouse, whether it is one or two generation units, that could be an emergency expenditure request of 15-$30 million. there is no other place to ask for that money besides the general fund if we do not have reserves to pay for it ourselves. we are operating the water and power system for a

obviously, there are uncertainties early in the budget process. we are all concerned about the continued economic recovery and with what is happening internationally and that the state level, we want to keep a close eye on the economy. our benefit cost growth, editor all estimates and projections. we will know the true increase in health and dental and retirement costs in the upcoming months. the state budget continue to be an area of great uncertainty with changes to the redevelopment agency, public safety, health and welfare realignment. we make no assumptions about current year's spending or even that supplemental spending, the single biggest uncertainty being the outcome of labor negotiations, which we will not know about until the spring. to provide history and our projections, the point of this slide is to show that over the past six months we have seen continued improvement in our finances. at the time we issue our joint report, we were projecting a $480 million deficit for next year, $642 million the year after. we issued are five-year fina

special event, when we go forward we will right size the budget. we will look at special event and doing due diligence. deferred maintenance, a reference that as well. overall the underlying factor is that we have underbudgeted overtime. as we go forward with preparation for the biannual budget process, that is what we are in the course of doing. moving forward to vehicle maintenance, this is another large driver. the age of the service is beyond the life span. the federal transit administration has a circular that dictates the light of the vehicle is typically 15 years. as we look at the fleet, we are beyond the mid-life. when we look at what we need to do, we are spending a lot of time trying to shore up for we are, and that requires overtime. we are expanding the fleet plan. the same aspects over time is needed to complete inspections. we're shoring that up as well. service, as it relates to special events and major infrastructure projects, we're talking about the cost to be reimbursed. a good example of that was the st. francis circle work where

i know you want to be able to take this into account when you present the budget for us. i would rather see the overall budgeting and see how these increases will impact your budget. preferably, i would rather see this in march or april. i think i would be more ready to make a decision at that time. january might be fast because of the holidays. everyone from the school district and city college will have a hard time try to grasp what this means for the budget and how they can allocate those funds. those are just bought some of my thoughts. >> i appreciate that, supervisor. the reason we did choose this time frame is that, we owe the mayor a budget by march 1. if this is not going to happen, we will be having layoffs. we need to have much more intensive conversations in our commission meetings in january and february as we prepare the budget, if it is not going to happen. supervisor chu: through the mayor's budget office, you are requesting departments to submit their budget. >> february 21 is the charter deadline for departments to submit budget requests to the controller

but if they're going to be equal players in the budget process they really needed to have their own budget agency as opposed to relying on numbers that came from the executive branch and that's really the reason for the cbo. >> if you do say yes or no, as the cbo been successful? >> i think it's been phenomenally successful, and i think it's success is mostly measured by the fact that i think if you talk to most people in immediate cut in a deep most people if they're being honest with you on both sides of the aisle in the congress they would say that the congressional budget office, at least concerning the budget probably has the most credible numbers of medical information out there. that was not a foregone collusion but it was not something that necessarily was destined to happen. in fact, if you had said to someone in 1974 look, we're going to great and nonpartisan agency in the middle of the most partisan environment imaginable come is there going to work? i think an awful lot of people would have said no, but it was made to work and i think they worked hard on making it to work, but

when you bring it back, the budget for the military and bring the budget back today. [applause] supervisor avalos: i am not sure we need another speaker after that. seeing no one else come forward, we will close public comment. colleagues, we have this item before us. i want to thank the new priorities campaign for there's work on the resolution coming forward. labor and faith and community groups that are here today and in touch with constituencies around the city and in the bay area. thank you for your work. this is a small resolution with the big message that is clear. we are going in a direction that is leading us to a future that is very bleak. if we cannot look at our future generations and take care of veterans and continue to cause damage around the world with our military spending, we are heading off a cliff. this is a voice in the other direction that i support. i want to thank my colleagues for supporting this resolution as well. supervisor marc, thank you. that would like to motion we move this forward with recommendations. -- supervisor mar, thank you. >>

the budget process. that is the contract. supervisor chu: thank you for the presentation. supervisor kim: i and a stand with regis that we're limited in our ability to negotiate a contract because of requirements set by the state. so when asked to also be allowed to go into a future in agreements with other entities, are we assuming that these entities will have similar restrictions? >> we are anticipating that. the air resources board has released an rfp for a third- party entity to administer emissions allowances. this city will be issued those emissions allowances by the air resources board, and we will be expected to auction goes off in order to offset the cost of the cap and trade program to our rate payers. it is expected that these will be most likely very similar to what has been done by the energy commission with regis, which is a nonprofit entity that is non- partisan, neutral, and they can go in and look at it in a very factual way to certify whatever the environmental attribute is in question.

this will be the first year we do a two year budget. the some of the big enterprise departments are going to be doing a fixed two-year budget, but they have to propose two years and cannot change it in the second year unless there plus or minus 5%. they're not going to do that with dbi. the second year has to be balanced, but we will reopen in revisit our budget every year. every year we have -- every year we what do propose a balanced budget. the mayor's office is projecting to be quite short in the general fund. next year they're saying $262.7 million short of the general fund. they are constructing the general fund departments to cut budgets by 1 percent signed. and we are lucky in that we are not general funds. we can be making a different type of argument, but just a you know those are the instructions from the mayor's office. they are expecting across the board increases. those will have to be covered within our budget. they are expecting health to go up about 6 percent said. retirement, they are an argument about whether they will