Good afternoon.

The meeting will come to order.

Welcome to the first meeting of the budget and appropriation committee for 2024.

I'm Supervisor Connie Chan, Chair of the Committee.

I'm joined by Vice Chair Rafael Mendelman, Supervisors Mirna Malgar, Shaman Walton, and President Peskin.

Our clerk is Brent Halipa.

I would like to thank Sue Aintnalls for SF from SFGov TV for broadcasting this meeting.

Mr.

Clark, do you have any announcements?

Thank you, Madam Chair.

Just finding a reminder to those in attendance to please make sure the sounds call cell phones and electronic devices has to not track our proceedings.

Should you have any documents to be included as part of the file, how they should be submitted to myself, the clerk.

Public comment will be taken on the item on this agenda.

When public comment is called, please line up to the west side of the chamber to your right, my left along those curtains.

And while not necessary to provide public comment, we do invite you to fill out a comment card and leave them on the trade by the television to your left by the doors if you wish to be accurately recorded for the minutes.

Alternatively, you may submit public comment in writing in either of the following ways.

Email them to myself, the budget and appropriations committee clerk at B-R-Ent.j A L I P A Hat S F G-O-V.org.

If you submit public comment via email, it will be forwarded to the supervisors and also included as part of the official file.

We may also send your written comments via U.S.

Postal Service to our office in City Hall.

That's one Dr.

Carlton B goodlet.

Place Room 244, San Francisco, California, 94102.

And Madam Chair, that concludes my announcements.

Thank you, Mr.

Clark.

And please call item number one.

Yes, item number one.

Is a hearing to receive updates on the six-month budget status report for fiscal year 2023 to 2024.

Madam Chair.

Thank you.

And today we have Michelle Allersma Controller's Office Budget and Inlus Division.

Thank you.

Thank you very much, Supervisor Chan.

Yes, Michelle Aller Smith from the controller's office, and I have a presentation if that can be placed on the screen.

Okay.

In summary, so we issued our six-month report about three weeks ago, and the top line piece of information is that it's um we're projecting an improvement in the current year ending balance of about 35 million dollars, um, which would reduce the shortfall that we projected in our in our forecast um by the same amount to about six seven hundred and sixty-five million dollars for the two budget years.

Um a couple of things going on, um uh additional weak weakness in our citywide tax revenues on top of what we projected in our prior uh report, and that is more than offset by um some strength, additional strength beyond the mid-year cuts um that the mayor uh received from departments.

Um large then the largest piece of which is uh additional revenue at the Department of Public Health.

So this is the same um content, but kind of in the table format that we show in the report.

And you can see the bottom line improvement of 35 million.

Um then just to note that what we're comparing ourselves to that is the um the five-year forecast that we issued in December, upon which the mayor's budget instructions were based.

So um a lot of numbers on this page.

These are citywide, what we consider citywide revenues, they don't belong to any particular department.

And I'm looking at the column all the way to the right, the variance column from our last projection.

Um, just to highlight a few of the things that have changed since we last came to you.

Um about $36 million in additional projected weakness in property tax.

And really, that's coming from um the fact that when we did our fall projection, we tried to accelerate it.

We didn't have full assessment appeals data.

So this projection now includes um projected refunds that we have to reserve for for the entire body of assessment appeals that were filed last fall by the September 15 deadline.

That's 36 million.

Um, another highlight for you is uh additional weakness of 48 million dollars in business tax.

Um a large portion of that is due to additional litigation that has been filed in the current year.

So claims against taxes that have been paid.

Um, and working with the city attorney, we determine um how much we need to reserve for that potential future repayment.

And then there are also some prior year refunds that were recorded in the current year that are adding to that.

A little bit of additional weakness in sales tax and hotel tax from what we projected before.

We're really just seeing a plateauing in hotel tax for a number of reasons.

We are our forecast for the year was just more optimistic and assertive than reality is turning out to be.

So there's some improvement in the in the projection in transfer tax.