San Francisco City Hall peered into our collective future on Friday, and the view was foreboding.
Controller Ben Rosenfield just released San Francisco’s new five-year plan, laying out projections and guidelines for the city’s financial future until 2022.
The big bombshell: Unless someone steps in, budget shortfalls are set ti shoot to the moon. Our $119 million budget gap will increase 612 percent in five years, reach upward of $848 million.
Of course, the entire point of these budget plans is help curtail such problems before they start.
But that may be harder than anticipated, because even though the economy is still driving hard, the very nature of San Francisco might be what’s slowing down growth.
Although office vacancies are “not historically low” right now, the supply of available offices is tighter than it has been since the turn of 2000.
Even companies that want to expand could have trouble adding new jobs, and thus new payroll taxes to feed the city’s needs.
But of course, that’s why we’re building so much, right?
Well, every little bit helps, but Rosenthal also warns that “even development to the maximum allowed would represent only a small fraction of the annual office employment seen this decade.”
After all, the city is adding approximately 25,000 new jobs each year, and 35,000 last year alone.
In fact, in 2015, San Francisco hosted an all-time high of nearly 669,000 jobs, equivalent to more than 77 percent of the estimated population.
Meanwhile, the general flattening of the housing market this year, while a relief for residents, can also pose a fiscal problem.
Rosenthal cites Zillow estimates indicating prices citywide have declined slightly year over year. Other sources suggest slight increases in home values, but nothing compared to previous years.
On top of that, the population boom is straining public transit, and by implication all of our other byways.
In 2011, the value of the time lost through commuting hours annually was about $3.5 billion. Now it’s estimated at over $5 billion.
In short, while the city has been working to keep up with growth through both construction and infrastructure, it’s not nearly close to enough.
Now growth might be tapering off, partly because of market forces and partly just because we’re short on room, which puts City Hall in a new financial bind.
The plan report also tactfully references “change at the federal level” that may spell trouble for the city’s already troubled outlook.
Mind you, it’s not all doom and gloom: The entire point of the 107-page report is to find ways for the city to mitigate (although not eliminate) these problems.
If you’re looking for more tangible good news, Rosenthal does note that the city’s pledge to provide 30,000 new units of affordable housing by 2020 “is well on track,” although only 5,700 units are in hand so far.
Five Year Plan [Controller]
SF Home Values [Zillow]
SF May Lose $900 Million Under Trump[Curbed SF]