Public Press/KALW budget roundtable examines city’s fiscal crisis


The Public Press and KALW (91.7 FM) teamed up for a budget roundtable that aired Aug. 17 on the “Crosscurrents” news program. A panel of local experts offered a lively and informative on-the-air discussion about San Francisco’s budget crisis and its impacts on residents and communities. Holly Kernan, KALW news director, hosted the discussion with Christopher D. Cook, editor of The Public Press City Budget Watchdog Project, and three prominent civic voices:

Following is a transcript of the half-hour panel discussion, hosted by Holly Kernan and produced by The Public Press Budget Watchdog Editor Christopher Cook. To hear the show, go to “Crosscurrents.”

Kernan: Earlier this year, San Francisco faced a nearly half-billion-dollar shortfall. That’s right: half a billion. The city had to find ways to cut nearly $500 million out of its $ 6.6 billion annual spending. It seems like a good test case to take the pulse of cities around the Bay Area, so today we’re zeroing in on how that process works — and how it might be reformed.
Our partners at The Public Press, which is a new online daily newspaper in town, launched a project called the City Budget Watchdog to find out how the process works. Watchdog Editor Christopher Cook joins me now to give us the background. Christopher is an award-winning journalist and former Bay Guardian city editor. I asked him where we stand now with the San Francisco budget.
Cook: We’ve ended up with $6.6 billion, which involves cuts to public health and social service programs, pretty substantial cuts, and meanwhile, increases to police and fire budgets. Not as large as earlier increases were thought to be, but still increases for those divisions in city government. And we’re still waiting to hear from the state and the budget analyst’s office about what’s going to happen to impact that from the state cuts.
Kernan: How did politics play into the budget?
Cook: On one level, I think everyone would agree that the mayor’s run for governor is impacting this in terms of his interest in making sure there are no new taxes in the budget, and so they’ve been very clear in promoting that idea: that we passed this miracle budget that doesn’t cut police and fire or teachers, and also doesn’t raise taxes. And that does play well in (the) Central Valley and in other parts of Southern California. There’s no debating that.
Within local politics, there’s this perennial battle between police and fire sectors, and public safety, and then public health. It’s a pretty sad and crazy battle when you think about it because the two are pretty intertwined. I mean, how can you have public safety without public health? How can you have public health without public safety? But interestingly, if you go back in city politics, there’s really some different cultural connections, in terms of where the budgets seem to appeal in terms of constituents, and so you’ve got the social and human service public health programs, like in the Tenderloin and other poor neighborhoods, serving folks who are near the bottom of society in terms of their health and their well-being.
Kernan: Does it come down to who’s got the best lobbyist? Or who has a voice and who doesn’t?
Cook: Partially. You know, there’s been some very intensive lobbying during this budget season, and the firefighters for instance, the union spent $75,000, by far the most of any lobbying group in the budget process. And you did have some very vocal protests from both the firefighter’s union and the police. You also had big protests from the health care workers and other public sector workers. So everybody was weighing in quite heavily.
Kernan: We’re looking at the San Francisco budget process to understand how cities are dealing with shrinking revenues and increasing demand for many services. We’ve invited some of the people who work in San Francisco and whose constituents are directly affected by the cuts. We’ll get to hear their insights into the budget process, and how they might suggest we do it differently.
Joining us now, Sharen Hewitt is the executive director of the Community Leadership Academy and Emergency Response Project ; Gabriel Metcalf is the executive director of San Francisco Planning and Urban Research Association, otherwise known as SPUR; and Calvin Welch is program director at the San Francisco Information Clearinghouse.
So, I want to ask all of you to indulge me in a quick lightning round question to get us started. So Sharen, let’s start with you: If you could propose one change to the budget process, what would it be?
Hewitt: I would say that we really need to look at ensuring that the most vulnerable parts of our community are engaged, that we understand and look at the efficacy of some of our previous spending strategies.
Welch: I think that the budget analyst and budget director functions, one of the mayor, one of the board of supervisors, should be combined. I think there should be one budget office that serves the mayor and the board of supervisors, and quit playing the games that are generally played between the executive and the legislative branch.
Metcalf: I’d say what we should do is produce two- or three-year budgets so we understand what is a one-time problem and what is an ongoing problem.
Kernan: Is the problem about how we do budgets about revenue, spending priorities?
Metcalf: I think the clear majority of voters in San Francisco have signed up for this to be a high- tax, high-service city. And there’s not a lot of fundamental debate about that general idea. But if you work hard enough at it, you can spend any amount of money. And the needs are potentially limitless. And you see that at the national level with this talk about health care. It’s now 16 percent of GDP; it’s going to go up to 31 percent of GDP. And there’s no such thing as enough in many kinds of services, so there’s something just kind of universal about the problem of ‘How do we make decisions about whatever amount of money we spend?’ And because it is a diverse city, we don’t all agree about what the priorities are. So in essence, what you’re seeing is just the messiness of democracy, of different people having different priorities about what they want to spend the money on.
Kernan: Sharen?
Hewitt: Basically, I think that we have to move toward a fundamental commitment to ensuring equality of life for all the citizens of our city. And I think that far too long we’ve made political decisions that have left some segments of our populations exposed and excessively vulnerable. And I’m talking about some of the decisions that we saw through the budget process at the state. Who were the ultimate victims of that budget process? And I would say they were our young, our seniors. I would say they are part of what I think is a growing and emerging underclass of expendable people. And I think we really need to look at where our priorities are.
Kernan: Because they don’t have lobbyists?
Hewitt: Absolutely. The constituents that I represent, who were probably the hardest hit, they don’t have lobbyists. And they have and will continue to be part of what I call a permanent underclass. And I think we just can’t afford that.
Kernan: All cities are feeling the squeeze. Is it just loss of tourism and other revenue or fundamentally deeper economic issues?
Welch: There are fundamentally deep economic problems. The vulnerable people that Sharen talks about are vulnerable not only in the city budget, they are generally vulnerable to the economy that we have in the city. They are also kind of surplus folk. They are not employable, at least in terms of the economic activities in San Francisco. So I think the first thing we have to understand is that the problems that we are facing in municipal budgets across California do not come this time directly from government, they come from the private sector, they come from the economy.
We did not spend our way into this recession — we lost value. We lost the economic base, especially in this — Gabriel wants to talk about a high-tax, high-service city — this is also a very pro-development city. This is a city that depends inordinately on the value and transactions of real estate, and when the real estate sector collapses — actually is driven over a cliff by the principal players — then there are consequences in municipal budgets. And I think to try to address the problems of the budget only within the four walls of city spending is to miss the 900-pound gorilla in this, which is if we continue to go back to doing the same thing and expecting a different outcome, then we are indeed crazy. And the same thing is blowing as hard as we can to try to re-inflate  —as SPUR, for example, is proposing — the real estate bubble that got us into the problem that we’re at. So I think we have to do some heavy lifting and some hard thinking about what kind of economy should come out of what is going to be, I believe, a very prolonged recession in Northern California.
Kernan: Gabriel?
Metcalf: Capitalism has a boom-bust cycle, as Calvin well knows, and as long as we exist within capitalism, we’re going to be experiencing ups and downs in the economy. And we have some policies in place, in particular (former Supervisor) Tom Ammiano’s Rainy Day Fund, which functioned to smooth the revenues to the city somewhat. But in hindsight, the Rainy Day Fund probably wasn’t strong enough to do as much smoothing as we probably really want. We probably need to do a better job of using our own policies to smooth the boom-bust cycle of capitalism.
Kernan: Let me move back to the budget process. It’s been called in The Public Press’s reporting a sort of dog- and- pony show that’s in some ways a fiction, where you cut things and then people go before the board and lobby   – what communities and interests are not getting a seat at the table?
Hewitt: I think there are a number of the entities that are not being represented in these high-level discussions. You know, clearly, families, and clearly young people and children. I want to talk a little bit about my constituency. As you know the CLAER Project is about seven years old and we are not sophisticated political lobbyists or advocates. We’re just on the ground, responding to families. We work primarily with public housing residents. And just to give you a snapshot of what we’re talking about, we’re dealing with families who are largely single moms – average family about two children. Roughly, even before this recession, we’re talking about average income of about $12,000 a year.
Kernan: $12,000 a year?
Hewitt: $12,000 a year for a family of three. And I would say they are some of the sharpest economists in town, and continue to be, managing and negotiating off of that kind of a budget. I say that the issues of looking at the opportunities for economic upward mobility for them has completely collapsed in this market. Clearly, as I said before, we’re dealing with some dual and parallel realities in this city and across the nation. That the kinds of strategies that have been deployed, we need to look at in terms of has our government been effective in terms of mitigating this permanent underclass and providing economic opportunities, even when we did have resources? Whether we look at increasing taxes or whether we look at strategies that bring more synergy to our public demands on both the federal and state government, is really the kinds of things I’m interested in talking about. Because it’s really not whether or not we’re capable of generating enough revenue in San Francisco to sustain this population, but the continuity of public strategies and the commitment to this class of people from the federal, state and local governments.
Kernan: So, Calvin, is there a way the city can generate more revenue and deploy it more equitably?
Welch: Well, that’s the hope. It seems to me the reality that we face is that as a city we simply no longer care about who works here. We care more about who invests here, who buys real estate here, who sells real estate here.
So in my active lifetime in this city, we’ve gone from a city which employed a majority of its residents in San Francisco, to a city that now is almost 50-50. That is to say, half of the working age population in San Francisco don’t work in San Francisco. We’re increasingly housing a regional workforce because they’re the only people who can afford the very high cost of market-rate housing in San Francisco. And we have pretty much declared surplus low-income residents. I think as a city, economic surplus they’re not — they turn out to cost society a great deal to deal being ignored. They show up in emergency rooms, they show up in hospitals, they show up in jail, which is a very expensive housing program, and an even more expensive medical program.
So, I think we have to get smart about how we deliver services. There’s a whole program that could be devoted to that. I think it has to look at employing San Franciscans in dealing with San Franciscans, and in that regard it will address income levels. But I think that we have to think through what kind of a city we are, as opposed to the kind of city some of us would like to be, and figure out the best strategies to employ the maximum number of San Franciscans in San Francisco.
Kernan: So let’s take the long view here. Gabriel, what are some of the systemic solutions to this mess?
Metcalf: There are, I guess, two levels to this conversation. One is the economic base itself that generates the money that both pays wages to people but also pays the taxes. The second level is the budget process. And they both need work. We have been essentially flat in total number of employment in the city since 1970. And beneath that aggregate number, lots and lots of kinds of work have left the city and been replaced by other kinds of work. And Calvin’s right that it’s created a situation where it’s basically the highest-end employment in the whole country’s economy, locates here. And part of that has been something that lots of cities have seen as manufacturing leaves the cities and eventually leaves the United States altogether — and we cease to make as many things in this country as we used to — we have not figured out how to reverse that. And probably all of us here would think we need to figure something out.
Within the industries that are located here, we probably can do a lot better job at making them work for the residents and having better career ladders that make more kinds of jobs accessible to more people. I’d rather face the problems we have than the problems of a city that’s located in a region where the entire economy is collapsing. At least there are opportunities for us, so in some ways we should be able to do better.
Kernan: Sharen Hewitt, solutions?
Hewitt: I’m going to respond to what Gabriel said. I think we really do have some opportunities here in San Francisco, unlike the rest of the country, because of the small numbers. And I think we have enough services and I think we have the intellectual capacity. Do we have the political will to ensure parity and a level of deliberate attention to all segments of the population? The budget process does not have to elude us in the way that it has.
I think one of the missed opportunities is our use of key commitments on the part of the city and ensuring that those commitments have the integrity and forethought of a longer-term vision. For example, we have a master planning process here in this city that looks at our development strategies. We also have a number of documents that we submit to the federal government, the mayor’s office of community investment has a major document, the housing authority has a major document. There seems to be not always the kind of continuity in terms of planning and forethought to look at accommodating our existing population, and I think we’ve missed a tremendous amount of opportunities in that regard.
Kernan: And Calvin, let’s end with you. Solutions. Systemic solutions.
Welch: Gabriel is correct in the sense that there is a sequential relationship between the budget crisis and the broader economy. On the budget side, the notion of multiple-year budgets is going to be on the ballot this November. A key component of that charter amendment is putting the city employee unions’ memorandums of understanding forward in the process so that supervisors and mayors understand how much they’re going to have to pay their workforce — which is after all, what, 80 percent of the budget? — instead of passing a budget, and then having the mayor — generally for political advantage — negotiate contracts with city employee unions. That’s going to be on the ballot. People should look very strong at that measure, and I would urge their support for that measure.
Second of all, we have to put together the budget analysis of both the board of supervisors and the mayor. The ‘95 new charter that created a strong mayor I think did a great disservice while at the same time giving increased powers to the board of supervisors over the budget. Before ‘95, the board could only cut a budget, they could not add. They can add, but they’re not present at the table in creating the budget.
The legislative function in this country is control of the purse strings. Our local legislature does not have control of the purse strings. We need to correct that. We need to create a more even balance between the executive branch and the legislative branch in the formation of the budget, which addresses the real power in the city, which are the departments – that’s where the budget decisions are made. I know that departments sometimes defeat mayors. I know that departments often defeat the board of supervisors. And the great victory of departments in San Francisco is that they’re invisible. Nobody really understands the incredible important role they have in creating the basic budget document. And if you want to change the way we spend money, you’re going to have to change the culture of the bureaucracy in San Francisco, which is the subject of another program.
On the economic side, on the broader economic side, we have to look at what seems to me is the reality that this country faces, that this region faces and this city faces. What the hell do we do for a living? How are people going to work? What is work in the 21st century in North America? 
We are going to have a very long recession, employment-wise. Already talked jobless recovery. People are not going to be put back to work. And the people that Sharen are talking about, African-Americans, haven’t been put back to work, one could argue, since the mid-‘60s and have dropped out of the unemployment figures, are no longer even counted. We’re going to be at 10, 11 percent unemployment very quickly, and it’s going to stay that way for a very long time. And 10 or 11 percent unemployment, the way it’s measured now, is unemployment of the most employable people. So when the most employable people —   10 percent of them — cannot find work, imagine what marginally employed, or marginally educated or indifferently educated people face.
We’re going to have to   — without sounding too grand — reinvent work in urban America. And clearly the green economy, sustainability, has an opportunity. Health care has an opportunity. In-home health services. A program that uses local people to provide fundamental care for people who need assistance in their daily lives. Seniors or profoundly disabled people. Keeps people out of hospitals, cuts costs on the hospitalization side. That is an employment opportunity for thousands that cannot be off-shored, that cannot be moved to Taiwan. We gotta take a look at that. But there are many other opportunities that exist that my mind simply cannot grasp. We need to put our best and brightest on that question. It is fundamental not only to future budgets but our future economy and wellbeing as a city.
Kernan: So finally, what about some rays of hope. The national economic stimulus package is supposed to do some of this. Rays of hope. Can we end on that note? Sharen, Calvin, Gabe? Whio wants to start?

Metcalf: The ray of hope is that this is a community that wants to chart a different path from the rest of America. And this is a community where we all agree that we want a robust set of public services. And so that fundamental question has been answered. We need to create a pro-growth environment that will generate the money we want to provide the level of services that is different from the rest of America. We are trying to make up for shortfalls in the national level and especially in the state level in one city. And so that’s our challenge. We know what we want to do, but we have to generate a lot of wealth locally to pay for what the state and the federal governments are not doing. I think we have all of the tools we need to do that, and so I think that’s what we really need to be focused on is growing the economic base of this city so we can pay for the services we want.

Kernan: Sharen — rays of hope.

Hewitt: Well, I think that essentially San Francisco as a major city is actually small enough for us to be able to measure the effectiveness of innovation and a real commitment on the part of our public leadership here. But again, I think San Francisco has the capacity to join voice with a regional strategy as well as a national agenda to refocus our government back on our urban settings.

Kernan: Calvin — any rays of hope?

Welch: Yeah. I think both the two rays of hope from Miss Sunshine and Mr. Sunshine are — I certainly embrace and think will happen. And in addition, I think, one of the good things that came out of this budget process was that across disciplinary lines, if you will, across the silos that so separate nonprofits and city employees — there was a fundamental and basic discussion and dialogue that developed this time around with key members of the board of supervisors. Unfortunately, the mayor kind of absented himself from that process. But I think there’s a very good civic dialogue under way. We have to figure out a way to deepen and broaden it.

There is some desire towards the end of this year, beginning of next year, to actually formalize those dialogues into some sort of community congress that will come up with a set of actionable proposals at the local level. I am very hopeful that that kind of dialogue will result in significant and meaningful changes that, I agree with Gabe, we do want to do in San Francisco — and I agree with Sharen that we do have the capacity to do it. We are small enough, we are committed enough. I think we may even be smart enough to do it.

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