O F FI C E OF T H E M A Y OR
SAN FRANCISCO

L ON D ON N. B R E E D
M A Y OR

Tuesday, March 31, 2020

Dear City Department Heads:
San Francisco is experiencing an unprecedented public health emergency, which has changed the
way we all live and work. Across our country and the world, this pandemic is not only wreaking
havoc on public health, but it is undermining the economic vitality of our communities. This has
been, and will continue to be a time of unprecedented challenges for us all.
What gives me hope in the middle of this crisis has been the incredible ability of this great City
to respond. Our health care workers and first responders are providing care for those suffering in
our hospitals. City workers who continue to serve our City and those who have shifted from their
normal duties to staff our Emergency Operations Center, which is the heart of a massive citywide
response to this pandemic. Across the entire City, San Franciscans have embraced their role in
this emergency through collective action and social distancing to slow the spread of COVID-19.
We have come together as one City with a focus and resolve that we must maintain in the
challenging days, months, and years ahead. This includes our efforts to address the devastating
economic fallout from this pandemic.
Beyond the significant strain on our healthcare system and the health of our residents,
COVID-19 is having alarming and wide-ranging financial impacts. From staggering financial
losses for small businesses, debilitating income loss for workers, and declining hotel and transfer
tax funds, we are witnessing devastating financial impacts for our residents and the City budget.
Today, the March Joint Report update issued by the Controller’s Office, the Board of
Supervisors’ Budget and Legislative Analyst, and the Mayor’s Budget Office projects revenue
reductions for the final quarter of this fiscal year that are staggering – we are anticipating
between $167 million to $288 million in General Fund losses. That is not for the entire year, but
for just three months alone. The reductions are driven by significant changes in major taxes
including hotel tax, transfer tax, and sales tax. The Report also projects that these significant
revenue losses will continue into the next two fiscal years driving up the projected deficits to
between $525 million and $776 million for FY 2020-21 and $438 million and $606 million for
FY 2021-22. That’s a combined shortfall between $1.1 billion and $1.7 billion compared to
prior projections driven by health crisis related revenue loss.
San Francisco has adopted many prudent financial policies since the last recession that will
strengthen our ability to respond to financial events like the one we are currently experiencing,
including building healthy reserves, restricting the use of one-time revenues, long-term financial
planning, and two-year budgeting. This puts us in a better position to address these economic
impacts, but given the sheer size of the financial losses we are facing, we will have to implement
meaningful solutions and make difficult choices.
1 DR. CARLTON B. GOODLETT PLACE, ROOM 200
SAN FRANCISCO, CALIFORNIA 94102-4681
TELEPHONE: (415) 554-6141

 O F FI C E OF T H E M A Y OR
SAN FRANCISCO

L ON D ON N. B R E E D
M A Y OR

Over the next month, my Budget Office will be developing a plan to bring costs in alignment
with these lower revenues for the current year. We will be focused and deliberative to ensure our
response to the significant shortfalls and ongoing economic contraction are considered with
impacts to City departments, labor partners, and community organizations at the forefront.
In order to offset these significant financial losses, I am instructing departments to help identify
cost reductions and curb spending immediately. We also need to focus staff time and resources
on our essential workforce, programs, and efforts that help our City respond to the health crisis
and support vulnerable residents. To meet these two goals my Budget Office is implementing the
following measures over the next month:
•

•
•

Only allow hiring of essential workers. There are many important staffing needs of
Departments who are responding to the health crisis, and we must focus our hiring efforts
to ensure that they have the support they need. Over the next month, all requests to fill
positions will be approved by my Budget Office to ensure we are prioritizing the hiring
of our essential workforce.
Evaluating and pausing non-essential capital projects funded in the current year.
Reviewing and pausing new programs funded in prior budgets that have not started.

These measures will allow us to develop a current year rebalancing plan that combines reduced
spending and some appropriate use of reserves, as well as prioritize resources to support our
COVID-19 response and recovery efforts. Further instructions will be issued to departments in
May to help us address the budget year shortfalls.
If you have any questions, please reach out to my Budget Office.
Thank you for your partnership during this challenging time. Together, we will get through this
time of crisis, take care of our residents, and reposition our City for recovery.

Sincerely,

Mayor London N. Breed

1 DR. CARLTON B. GOODLETT PLACE, ROOM 200
SAN FRANCISCO, CALIFORNIA 94102-4681
TELEPHONE: (415) 554-6141