FINAL UPDATE: Public comment is just underway at this marathon Budget and Finance hearing, but the big news is thus: a promise from the chair of the Budget and Finance committee, seconded by the President of the Board of Supervisors, that the Board will not accept Muni”s budget as currently written.
“We’re going to reject this budget,” John Avalos told The Appeal. The motion to reject the budget looks a lock to escape committee, perhaps even unanimously, and then will need seven votes at next week’s full Board meeting to go into effect.
Earlier, Board President David Chiu outlined the purpose behind the legislation and today’s marathon hearing — there is overspending in Muni’s budget, as outlined below, and the Board believes Muni can fix it.
“There’s tens of millions” of dollars Muni could save if it took one more look at its books, Chiu told The Appeal. Whether Muni can come up with a budget to the Board’s liking in time, or whether or not anything can be done about the work orders remains to be seen.
——Original liveblog, 2:24 PM
We plan on liveblogging the near-guaranteed fireworks when today’s Budget and Finance Committee agenda item concerning the Board’s potential rejection of Muni’s budget is called (we just saw former Board President Aaron Peskin in the wings, and he’s suited up), but there’s plenty to chew on right now, courtesy of Nani Coloretti, the Mayor’s budget director, and Ben Rosenfeld, our Controller.
First of all, the Muni budget — the sticking point for many has been work orders, where other city departments bill Muni for services ostensibly performed on the transit agency’s behalf. Muni is running a budget deficit of approximately $130 million for the coming fiscal year, even as city agencies ask the much-maligned transit provider for $80 million in work orders: asks from 311, from the Police Department, and even the Human Services Agency.
So what if the Board rejects the budget — will those departments have to swallow the costs? Not at all, Coloretti told us — the work orders will still be paid, but out of the general fund. And how’s the general fund doing? As Rosenfeld just told us, for reasons we will go into forthwith, it is not doing great: there will be about $49 million in general fund reserve able to balance next year’s budget: $20.1 million left over from this year (which is the minimum reserve), $5.6 million from savings trimmed from the Rec and Park budget, and the rest from savings from next year’s city budget (though exactly where we don’t yet know).
Which begs the question: if the Muni budget is rejected, and there’s $80 million to dig up, and only $49 million to play with — where’s the money going to come from?
And keep in mind the most recent estimate of next year’s budget shortfall is $137.7 million. Stimulus cash and cuts at Rec and Park add another $41.4 million to the pot, but that’s still almost $100 million short, and a balanced budget is due to the Board of Supervisors on June 1.
2:30 p.m. Since every functioning representative democracy needs a scapegoat, and the budget crisis has lacked a proper scapegoat through this whole saga (save for vague swipes at “the economy”), we figure we’d offer up some sacrificial… goats.
It’s all in revenue projections falling far short of projections, and the chief culprits are three taxes: property transfer tax, sales tax, and hotel tax. None of this is news per se, but it bears mentioning: the property transfer tax was $51.2 million short of projection, the sales tax $44.4 million short, and the hotel tax $43.5 million short. Not that revenue shortfalls weren’t anticipated, they just weren’t anticipated enough: “volatile” real property transfer tax revenues were allotted a 24 percent drop, but instead tumbled by 50 percent, according to the Controller.
The drop in local sales tax is blamed on, among other things, declining gasoline prices, and the hotel tax could drop even more if the “public health emergency to control swine flu… leads to voluntary or mandated reductions in travel.” Swine flu-related revenue reductions are NOT budgeted in, currently.
You’ll be able to read this report — the Controller’s Nine-Month Budget Status Report — for yourself as soon as the city posts it online, or until we borrow someone’s scanner. We’d use the Chronicle’s, but we fear them…
5:00 p.m. Ok, after a technical malfunction, we’ve lost the last two hours of our live blog, but let’s recap.
The Board’s Budget priorities were passed onto the full Board with recommendation.
John Hanley, chief of the Firefighters’ Union, exchanged some hot words with Budget & Finance Committee chair John Avalos, over firefighters being the lone group of city employees targeted for cuts in the list of priorities by name.
We’re now onto today’s showpiece, the hearing on legislation authored by Board President David Chiu, which would, in theory, somehow, allow the Board to reject the MTA’s budget and send it back.
As we said earlier, plenty of words flying around this packed Board chamber — Muni head Nat Ford explained how that, amidst a loss of $54.8 million in funding from the state and another $25 million in funding from the city — added, with other losses, to a revenue loss of $90 million — the transit agency did what it could to “spread the pain” when balancing its $130 million budget deficit.
Chiu said that Muni is not “fulfilling its mission” to provide transportation services to all San Franciscans. David Campos highlighted the plight of Alemany Boulevard housing project residents, who need to ride two buses to get to the nearest grocery store after the 67-Bernal Heights line was truncated.
5:18 p.m. We’ve been here for three hours. There’s a gentleman asleep in the front row of the audience benches, fully sprawled-out. We can relate.
5:20 p.m. Nobody likes service reductions, or fare increases, or the 30-Stockton, but as we’ve said before, the main issue is the work orders. Shoving the work orders down Muni’s throat is exactly what could get supervisors to reject the budget — but work orders haven’t been raised once in Muni’s now hour-long presentation on its budget. We asked Muni spokesman Judson True earlier what the course of action would be if the budget was rejected — there should be testimony later from the Controller and City Attorney outlining both the fiscal and legal processes, but it is very unlikely that any city department would rescind its work order, and as we stated much earlier, work orders somehow steered away from Muni would still have to come out of the general fund.
5:27 p.m. Here we go, onto the work orders — From 2006 to 2009, work orders increased from $38.7 million, to $45.9 million, to $55.9 million, to a proposed $78.4 million for next year.
How’d that happen?
Proposition A can’t be the culprit — though the 2007 ballot measure guaranteed an increase of $25 million in Muni funding every year, that’s not enough to explain it all.
5:31 p.m. Now we’re onto what Chiu called “the famous $1.96 calls,” the bill Muni gets every time someone calls 311 to ask for NextBus info. 311 information is generated from 511 — except a live human relays the information over the phone. 311 bills Muni about $7 million a year.
“So rather than using that money to pay for services,” Chiu asked, “The MTA’s paying for two ways to find out where our next bus is coming from?”
5:36 p.m. Another $300,000 goes to the SFPD, who provide security to city-owned garages, in the form of “driving by once at night,” Ford said. Nice work if you can get it. That’s part of a total of $18 million that goes to the SFPD from Muni, including $7 million for the Traffic Company. Of course, if and when the SFPD drives by privately-owned garages, presumably also with eyes peeled for malefactors, those private owners are not charged.
5:47 p.m. Good god, it only gets uglier: according to an audit, Muni’s transit fare inspection system — the Proof of Payment program — nets only about $350,000 in revenues — i.e., citations issued. Salaries run Muni $8 million, a net loss of…. uh, $7.65 million?? And I bought a FastPass why again?
Chiu: “We are throwing good money after bad… until we find a way to fix this program.”
5:53 p.m. More Chiu: “In the areas I have described (parking fees and fines, fare inspection, work orders, and — uh, our head’s swimming, we forget) I think there’s about $25 million in potential savings… and that is why I’ve crafted this legislation” to reject the budget. Muni’s spending like a trustafarian who just turned 18, and that’s got to stop, quoth the Supervisor.
5:59 p.m. Gosh, can a transit agency catch a break? Now Bevan Dufty’s harping on advertising — the old, out of contract billboards or other adspace in underground stations, on buses and elsewhere. Why can’t we be up to date? Don’t ask Muni; it’s hiding under the podium at the moment, sucking its thumb and demanding its security blanket.
6:01 p.m. Ok, finally, a hitter in Muni’s corner: Dufty said he will not vote for a Police Department budget without an MOU — essentially a contract between two city agencies that’s, like, breakable — between the PD and Muni, who has been “bullied” by the mean old Police Department when budget time comes along.
6:08 p.m. This is bizarre — there’s some sort of burlesque show going on in the City Hall rotunda. It’s loud as hell, so we went down there with some cab drivers to see what the commotion was — and were greeted with about 10 thonged shapely rear ends. Cabbie: “Who cares about my medallion? This is much better.”
6:12 p.m. If you’ll allow us to editorialize for a second: the cost of a FastPass is awfully low when you compare its cost to the cost of passes in other metro areas. When we lived in Boston a few years ago, we shelled out something like $75 for a monthly pass. AC Transit passes in Alameda County are $75. So paying $45 to use BART in the city and Muni is a deal — and the planned fare increases to the FastPass — $55 in by July 1, and $60 a little later — is completely reasonable, and far overdue.