From San Francisco The Human Services Network, 9/18/09
The Controller has updated his report on the General Fund impact from adoption of the State budget. The estimate is $26.5 million, which is down from $36.7 in the August preliminary report. The City’s FY 2009-10 budget includes a set-aside of $18 million to address state reductions, leaving a new shortfall of $8.5 million if the city chooses to backfill the cuts.
The state also shifted Redevelopment property tax increment funds, with a potential impact of $14.3 million, but the S.F. Redevelopment Agency expects to address the shortfall through its fund balance and financing options. They may delay some spending.
The State’s plan to borrow 8% of property tax funds will have a General Fund impact of $71.2 million, plus $9 million impact on the MTA, and $13.7 million on the Children’s, Library, and Open Space Funds. However, the State will make financing available at an interest rate that is more than sufficient to attract investors. Therefore there will be no impact, assuming the Mayor and Board approve the financing.
The Controller’s report provides more specifics on the local impact. Of the $26.5 million, the impact on Public Health is $16.4 million (MediCal reductions, State Office of AIDS reductions, substance abuse treatment, Prop 99 funds for county health services, and elimination of several other programs). Another $9.6 million impacts the Human Services Agency (CalWORKs employment services and childcare, TANF shelter funds and employment, Child Welfare Services, and some programs for seniors). Still unknown is the local fiscal impact of IHSS eligibility reductions, as the state is already late in implementing the cut.
The release of this report sets off a process for the city to rebalance its budget. The Mayor’s Office must submit a plan that address the shortfall to the Board within 21 days (by October 5). The Board Budget Committee is likely to hold its first hearing on October 7. The Board will have 45 days to adopt or amend the Mayor’s plan. If they don’t act, the Mayor’s plan will then go into effect.
The Mayor may address the $8.5 million shortfall through mid-year cuts. However, some believe that he will instead give departments early targets for next year, and take back funds for projects that have not yet begun or that are underspending. For example, in the past couple of years, departments put an early deadline on contract modifications and took back some funding from contractors. Nonprofits with city contracts should keep this in mind by planning out the effective use of city funds and requesting any contract modifications as early as possible.
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