San Francisco Budget and Appropriations Committee Meeting - June 15, 2022

The Budget and Appropriations Committee met on June 15, 2022, to hear presentations from multiple city departments on their proposed budgets for fiscal years 2022-2023 and 2023-2024, as well as to consider several related legislative items. Chair Hilary Ronan opened with remarks emphasizing the need to redirect resources toward basic needs for the city's poorest residents, citing food lines, tent encampments, and crises at homeless service providers. The committee heard from the Controller's Office on revenue estimates, and then from the Office of Economic and Workforce Development (OEWD), Human Rights Commission (HRC), Planning Department, Assessor-Recorder, Treasurer, Controller's Office, City Attorney, Ethics Commission, Department of Elections, Office of Community Investment and Infrastructure (OCII), Board of Supervisors, and the Mayor's Office, including the Mayor's Office of Housing and Community Development (MOHCD). The committee voted to advance several items to the full Board of Supervisors with positive recommendations, and continued the main budget appropriation and salary ordinances for further review.

Public Comments & Testimony

• Denise Dory (public comment on revenue estimates) called for more funding to repair or replace elevators in SRO buildings, noting that she had surveyed 150 SRO residents and found many with inoperable elevators.
• Reginald Meadows (public comment on revenue estimates) echoed the elevator issue, stressing that senior citizens in SROs are trapped in their rooms due to broken elevators, and urged the city to prioritize this.
• David Pilpel (public comment on revenue estimates) appreciated the Controller's analysis, questioned the absence of discussion on bond revenues and the new executive compensation tax, and suggested a reserve for uncertain tax sources.
• David Pilpel (public comment on item 6 – rescinding Superior Court surcharge) thanked former CAO Rudy Nothenberg for leadership on the courthouse funding and supported the legislation.
• David Pilpel (public comment on items 7 & 8 – fee ordinances) raised concerns about the timeline for approval under Charter Section 2.109 and requested a cost analysis for the proposed fees.
• Sandra Dratler (public comment on department budgets) spoke on behalf of Faith in Action Bay Area in support of $4 million for senior operating subsidies, urging immediate use rather than a five-year plan.

Discussion Items

Controller's Revenue Estimates and 9-Month Financial Report (Item 220719)

• Ben Rosenfield (Controller) presented the report, stating that tax revenue assumptions are reasonable but the budget relies heavily on one-time sources ($1 billion) and draws down reserves (40% of pre-pandemic level). Risks include economic uncertainty, return-to-office rates (33% telecommute assumption), Laguna Honda Hospital's accreditation issue, and a likely larger structural imbalance in later years.
• Carol Liu (Revenue Manager) detailed revenue growth, noting that without November 2020 tax measures, growth would be only 3.8% over five years. Property tax assumes 4% roll growth; business tax assumes 5%-4% economic growth and 33% telecommute; hotel tax recovery hinges on international travel and conventions; transfer tax saw two historic one-time transactions ($100 million) that won't repeat.
• Chair Ronan asked about the 33% telecommute assumption and its impact on business tax. Liu explained it was derived from press releases, surveys, and tax filings, and affects business tax, sales tax, and parking tax. Rosenfield added that property tax risk lies beyond the two-year budget due to potential rent resets from low office occupancy.
• Supervisor Chan asked if the 40% reserve draw includes Excess ERAF. Rosenfield confirmed it does not; ERAF is treated as ongoing revenue.
• The committee voted unanimously to file the hearing.

Office of Economic and Workforce Development (OEWD) Budget (Item 220694)

• Kate Sofis (Director) presented the OEWD budget: $150 million, a $4 million net increase from the prior year, focusing on small business grants, mid-market/Tenderloin investments ($28 million for safety ambassadors, $2.5 million for activation), and economic core recovery ($10 million for short-term activations). The budget includes 151 FTE (7 new), with 22 current vacancies.
• President Walton questioned cuts of $13.4 million in workforce development programs, suggesting workforce is not prioritized. Sofis replied that cuts were due to winding down one-time COVID programs, and that they are doing more with less, including innovations like outdoor job fairs.
• Supervisor Safai asked about the Amazon development agreement and MOU with developers. Sofis stated no current developer fees from Amazon; the MOU was for early community negotiation and has ceased. He also questioned the time to fill vacancies (3-10 months) and suggested pushing back hiring dates for savings. Sofis was open but emphasized some positions are critical for community impact.
• Supervisor Safai raised concerns about performance audits of OEWD grants lacking key performance indicators. Sofis acknowledged the finding and committed to implementing metrics within a year, including a shared system for tracking.
• Supervisor Mar asked about the balance between downtown investments and neighborhoods. Sofis argued the baseline budget focuses on neighborhoods, while Tenderloin investments are unprecedented and requested by the city. She noted that Invest in Neighborhoods is pivoting to a community-based approach.
• Supervisor Chan questioned the distinction between various ambassador programs and potential duplication. She expressed concern that heavy downtown investment comes at the expense of other neighborhoods and asked for equity analysis.
• Chair Ronan asked for details on vacancies. Sofis and staff broke down vacancies by division: 5 in workforce, 5 in Invest in Neighborhoods, etc. Ronan noted the department is the 'guinea pig' for vacancy questioning.

Human Rights Commission (HRC) Budget (Item 220694)

• Director Cheryl Davis presented the HRC budget, noting the department has quadrupled in size but lacks administrative support. She requested moving temporary exempt positions to permanent, and highlighted that the cross-cultural and juvenile justice work was not continued in the proposed budget.
• Supervisor Safai commended HRC's work and noted the Director of the Office of Racial Equity (ORE) position has a low classification, making recruitment difficult. Davis agreed she should have advocated for a higher classification.
• President Walton expressed concern that the ORE director classification is not commensurate with the responsibility of holding other departments accountable. Ashley Groffenberger (Mayor's Budget Director) confirmed an upgrade would require additional funds.
• Chair Ronan asked about vacancies: 6 funded vacancies, including ORE director, policy analyst, Dreamkeeper support, and others. Some are being held pending budget decisions.
• The committee then considered Item 9 (Accept and Expend Grant for Opportunities for All Initiative – $11.79 million from the state for youth jobs). Public comment was taken, then the committee voted unanimously to recommend the item to the full board for July 12 with a positive recommendation.

Planning Department Budget (Item 220694)

• Director Hillis presented the Planning budget ($62 million, down $3 million due to revenue reductions). He showed trends: permit volume declined, housing units authorized dropped from 4,500/year to 2,000; applications declined. The budget includes 35 vacancies (20 held for attrition/uncertainty).
• Supervisor Chan questioned why the Planning Department is taking over Tenderloin coordination from DEM with $4 million and new positions, rather than OEWD. Hillis explained that Planning has a community equity division and is implementing the Tenderloin Community Action Plan, continuing DEM's coordination role.
• Supervisor Safai asked about resources for streamlining the permitting process. Hillis noted ongoing efforts with the permit center and other agencies. Safai suggested repurposing a vacant position for a 'chief customer officer' to focus on streamlining. Hillis agreed to explore it.
• Supervisor Mar asked about the $4 million for Tenderloin implementation – it is for on-the-ground improvements from the community action plan, not new plans. Groffenberger added that DPH will continue Tenderloin Center operations through end of 2022 using one-time savings.

Assessor-Recorder's Office Budget (Item 220694)

• Joaquin Torres (Assessor) presented the budget ($36.2 million, flat). He highlighted AB 1466 implementation to remove discriminatory covenants, a new appraiser trainee program, and progress on the Property Assessment Tax System (SMART project). Vacancy rate is 4.9% (9 vacancies, 8 to be filled within two weeks).
• Supervisor Safai asked about the reassessment trigger for ADUs and whether the office would work on a waiver. Torres said state law limits flexibility but offered to pursue education and potential incentives.

Treasurer & Tax Collector Budget (Item 220694)

• Jose Cisneros (Treasurer) presented the budget (flat). He noted 22% vacancy rate (half attrition, half due to hiring challenges). The office is focused on implementing new taxes (commercial vacancy, overpaid executive, cannabis) and racial equity in hiring.
• Supervisor Safai asked about the guaranteed income centralized unit recommendation. Cisneros was open but noted other agencies (HSA, HRC) are closer to the work. Safai suggested repurposing a vacant position for that role.
• Chair Ronan asked about the 'First Year Free' program. Rosenfield confirmed the appropriation from the current year will carry over but legislation needs to be extended before November 1.
• Tejal Shah (Chief Assistant Treasurer) detailed vacancies by division: 2 in Financial Empowerment, 1 in Policy/Comms, 2 in Property Tax, 9 in Delinquent Revenue, etc.

Controller's Office Budget (Item 220694)

• Ben Rosenfield presented the Controller's budget ($82.5 million, up $5.8 million primarily due to salary increases and the 'R City' home fund administration). General fund support is flat. Vacancies reduced from 20 to 14, with all recruitments underway.
• Rosenfield highlighted the Government Operations Recovery Project (with DHR and City Administrator) to address hiring and contracting backlogs.

City Attorney's Office Budget (Item 220694)

• City Attorney David Chiu presented the budget ($103.5 million, 4.9% increase). He requested two new initiatives: a Worker Protection Team (1 lead, 2 deputies) and a Gun Violence Restraining Order team (2 attorneys). The proposed budget includes 8 new attorney positions (out of 24 requested). Vacancy rate reduced to low single digits.
• Supervisor Safai asked about consolidating worker protection with the DA's office. Chiu said complementary roles exist (criminal vs. civil).
• President Walton asked about funding the Worker Protection Team from 17200 fee recoveries. Chiu noted those fees can be used, but currently go to general fund or workers. Chair Ronan requested detailed accounting of 17200 funds.
• Chair Ronan expressed strong support for the worker protection unit, citing her background in worker rights, but noted competing demands from community ad-backs.
• Supervisor Chan asked about potential conflicts within the office representing multiple clients. Chiu explained ethical screens and consistent objective advice.

Department of Technology Budget (Item 220694)

• Linda Gerull (CIO) presented the DT budget (flat at approximately $50 million operating plus $50 million pass-through for departments). Vacancy rate 12% (32 vacancies, 29 held for attrition). Strategies include internships and apprenticeship programs.
• Emphasis on closing digital divide: 6,500 housing units connected, fiber to Sunnydale and Potrero, city becoming its own ISP.
• Supervisor Chan asked about SFGovTV budget ($5.7 million) and work orders from other departments. Gerull confirmed departments pay for services, and SFGovTV is increasing demand.

Public Works and Sanitation & Streets Budget (Item 220694)

• Carla Short (Interim Director) presented budgets for both departments due to Prop B separation. Public Works budget: $288.5 million (FY23, partial year before new department launches). Sanitation & Streets budget: $158.2 million (3 quarters). Prop B implementation adds 73 positions (mostly HR). Overall vacancy rate 21.7% (364 vacancies, 75 general fund). Street cleaning has 70 general fund vacancies, but the department is using temporary 9916 positions.
• Supervisor Safai criticized using Certificates of Participation (COP) for street resurfacing, as the debt outlasts the pavement life. Groffenberger explained it was the low-scenario capital plan recommendation. Safai asked for a list of projects not yet under contract for prioritization.
• Chair Ronan pressed on whether the enhanced cleaning budget (9 new positions + 45 corridor workers) will make a visible difference. Short and CFO Robertson expressed confidence, noting additional resources will allow return of redeployed staff to neighborhoods.
• Supervisor Chan asked about contingency if Prop B is repealed. Short said they are working with the City Attorney on impacts and cost savings.

Ethics Commission Budget (Item 220694)

• Deputy Director presented the budget ($7.1 million for FY23, 9% increase). 9 vacancies out of 33 positions, with 5 in active recruitment. Requests include reclassification of three positions and addition of an executive secretary.

Department of Elections Budget (Item 220694)

• John Arntz (Director) presented the budget (driven by number of elections: 1 in FY23, 2 in FY24). 39 permanent FTE with 3 vacancies (2 held for attrition). He discussed challenges with poll worker recruitment and the impact of universal vote-by-mail.
• President Walton asked about the open source voting pilot. Arntz confirmed it's on track with vendor providing equipment at no cost.

Office of Community Investment and Infrastructure (OCII) Budget (Items 10 & 11)

• Thor Kaslofsky (Director) presented the OCII budget ($700 million total, 80% pass-through for bonds/tax increment). 55 staff with several vacancies due to COVID and project slowdowns. The budget supports affordable housing, infrastructure, and parks in Mission Bay, Transbay, and Hunters Point Shipyard.
• The committee then considered Items 10 (Interim Budget) and 11 (Annual Budget and bond issuance not to exceed $99.68 million). No questions from members.

Board of Supervisors Budget (Item 220694)

• Angela Calvillo (Clerk) presented the Board's budget ($21 million, 2.2% increase). She noted 88 FTE with 2 vacancies. She requested restoration of two positions (1492 and 1222) that were not funded by the mayor. Chair Ronan announced that the mayor agreed to a technical adjustment to restore those positions.

Mayor's Office and MOHCD Budget (Item 220694)

• Ashley Groffenberger (Budget Director) gave brief remarks on the mayor's overall budget ($14 billion).
• Eric Shaw (Director, MOHCD) presented MOHCD budget: $205 million for FY23 (down $53 million), $164 million for FY24 (down $40 million). Decreases driven by one-time items (rent relief, Hope SF, federal grants). Increases include $11 million for Sunnydale community center, $10 million for capital improvements in nonprofit housing, $8 million for Local Operating Subsidy Program (LOSP), $4 million for Senior Operating Subsidy (SOS) program. 13 vacancies (11% rate).
• President Walton asked about DreamKeeper home loans: first loan closed in March, 450 attended info session, $10 million allocated.
• Supervisor Mar asked about the $4 million SOS program: Lydia Ely (Deputy Director) estimated 28 units over 15 years, with half at 15% AMI and half at 25% AMI.
• Supervisor Preston raised concerns about declining budget (from $260M to $164M), questioned commitment to affordable housing goals, and noted $64 million in uncommitted small sites funds from the $74 million appropriated by the board. Shaw said funds require due diligence and operational reforms are in process. Preston also asked about Prop I funds; Shaw said the mayor treats them as general funds and MOHCD has not made a formal request to use them for affordable housing. Preston also confirmed the Right to Counsel program remains fully funded.

Legislative Items (Items 6, 7, 8, 9, 10, 11)

• Item 6 (Rescinding $50 Superior Court surcharge): Public comment heard. The committee voted unanimously to recommend to the full board for July 12 with positive recommendation.
• Items 7 & 8 (Fee updates for amplified sound permits and Administrative Services reproduction/notary fees): Public comment heard. The committee voted unanimously to recommend to the full board for July 12 with positive recommendation.
• Item 9 (Accept and expand grant for Opportunities for All Initiative): The committee voted unanimously to recommend to the full board for July 12 with positive recommendation.
• Items 10 & 11 (OCII interim and annual budgets): The committee voted unanimously to recommend Item 10 to the full board for June 28 and Item 11 for July 12, both with positive recommendations.

Key Outcomes

• The committee voted unanimously to file the hearing on the Controller's revenue estimates and nine-month financial report (Item 220719).
• The committee voted unanimously to continue Items 1 and 2 (Administrative Provisions hearings) to the June 22 meeting.
• The committee voted unanimously to continue Items 4 and 5 (Appropriation and Salary Ordinances) to the June 16 meeting.
• The committee voted unanimously to recommend Item 6 (Trial Courts Courthouse Construction Fund surcharge rescission) to the full board for July 12 with a positive recommendation.
• The committee voted unanimously to recommend Items 7 and 8 (Police Code and Administrative Code fee amendments) to the full board for July 12 with positive recommendations.
• The committee voted unanimously to recommend Item 9 (Accept and expand grant for Opportunities for All Initiative) to the full board for July 12 with a positive recommendation.
• The committee voted unanimously to recommend Item 10 (OCII interim budget) to the full board for June 28 with a positive recommendation.
• The committee voted unanimously to recommend Item 11 (OCII annual budget and bond issuance) to the full board for July 12 with a positive recommendation.
• Chair Ronan announced that the mayor agreed to a technical adjustment to restore two positions in the Board of Supervisors budget (Items 1 and 2 related to Clerk's office).
• The committee will continue budget hearings on June 16 and June 22, with a public comment day reserved for June 24.