Hard Times Ahead for S.F., Mayor Warns

SAN FRANCISCO —  Mayor Art Agnos announced Friday that his Administration has inherited the biggest budget deficit in San Francisco’s history, and warned that painful spending cuts and fee hikes lie ahead.

“An easy-spending way of life is over,” Agnos said at a City Hall press conference. “This deficit is so huge, so mammoth, that everything is on the table. No one is exempt.”

He said no specific spending cuts or fee increases have been planned, but warned that the city will be forced to consider closing hospital wards, clinics and mental health programs, freezing the salaries of city employees and raising bus fares, business taxes and fees for city services.

Cocaine-Linked Violence

The impending belt-tightening comes as the city struggles to cope with a rash of violence linked to “crack” cocaine, increasing numbers of homeless people on its streets and the continuing toll of the AIDS epidemic.

The $172.4-million deficit for the 1988-89 fiscal year is more than twice the amount estimated only last November, near the end of Dianne Feinstein’s nine-year tenure as mayor. San Francisco’s total general fund budget is $1.2 billion.

Bob Gamble, budget director for the mayor’s office under both administrations, attributed the higher-than-expected deficit to unexpected increases in city expenditures combined with unforeseen drops in property tax revenues and interest income.

Since November, the city has had to set aside $40 million to cover two court judgments levied against it in litigation over city employee pay. It also has paid out $4 million more than it budgeted for welfare costs.

City’s Income Drops

At the same time, recently released figures on city revenues show that $28 million less than projected has come into city coffers. About $15 million of the shortfall was due to a drop in the number of property transactions taking place in San Francisco.

Gamble said the tax from such transactions had been “the city’s financial anchor for decades” and that it was not clear whether the decline was “a blip on the line or a permanent, long-term problem.” Another $9 million of the revenue shortfall came from lower-than-expected interest income.

Agnos declined to assign blame for the deficit, saying that to do so would divert his attention from the task of bringing the budget under control.

But Supervisor Wendy Nelder blamed ex-mayor Feinstein. “This is not something that just happened yesterday,” Nelder said. “It is a direct result of Dianne Feinstein’s very poor management and politicking with our surplus.”

Built Up Surplus

Feinstein earned a reputation as a tough fiscal manager during her years in office, as the city built up a budget surplus that reached a high of $150 million in 1982. But during the last three years of her tenure, the city spent more than it took in and made up the difference by dipping into its surplus reserves.

A Feinstein spokeswoman said the former mayor was unavailable for comment Friday.