Fix San Francisco's Budget
San Francisco has a huge budget at $15.9 billion.
The budget is larger than:
10 States: South Dakota, North Dakota, Vermont, Idaho, Maine, Montana, New Hampshire, Rhode Island, Wyoming, Alaska.
5 Countries (at least): Bahrain, The Bahamas, Cyprus, Malta, Monaco.
San Francisco also has an unusually large City workforce.
- SF has roughly 34,000 total City employees, which with additional analysis, translates to 24 core government function employees per 1,000 residents.
- The average city has 7-12 core government function employees per 1,000 residents.
- Using per-capita benchmarks for direct employees only, SF is 4-8k overstaffed compared to other major cities. NYC for example is at 4K direct employees.
San Francisco's budget has grown over time.
Our City's budget has grown since 2020 even as our population has declined from ~870K residents to ~840K residents. Today, SF government spends around $19,000 per capita.
"But San Francisco is a city and a county..."
Even when compared to peer city-counties, San Francisco has a large budget on both a raw and per capita basis.
The following 8 city-counties have similar populations and Democratic Mayors (with exception of Honolulu, whose Mayor is an independent) to San Francisco:
- Denver
- Philadelphia
- Honolulu
- Jacksonville
- Indianapolis
- Kansas City
- Nashville
- New Orleans
Where is all the money going?
For starters, a significant portion of it goes to homeless, health, and social services. Specifically, over $5 billion goes to the Department of Public Health (DPH), Human Services Agency (HSA), and the Department of Homelessness and Supportive Housing (HSH).
Both DPH and HSH have experienced a significant increase in their budgets, both over $800 million, since 2012.
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The City spends a significant amount on outside Contracts/Grants.
Generally speaking, one-third of the City's total budget goes to contracts/grants with outside vendors.
For example, in fiscal year 2024-2025, over 30% of the total City budget of $15.9 billion went to contracts/grants. This translates to over $5 billion.
Whose receiving these contracts?
A mix of corporate and non-profit vendors receive these contracts, with typically a few vendors getting the lion-share of contract dollars.
For example, per a 2023 SF Chronicle analysis, of the over 4,000 unique vendors the City had, just 44 vendors or 1.1% of total number of vendors had contractual relationships worth $100 million or more.
Some of these big vendors included major homelessness / substance abuse non-profits such as HealthRight 360, Tenderloin Housing Clinic, and the Episcopal Community Services of San Francisco. Many of these non-profits continue to receive millions from the City today.
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Non-Profit Spending has exploded.
City spending on non-profits has roughly doubled from $809 million in 2019 to $1.6 billion in 2025.
City non-profit spending is also not equally spread out among City departments. Per the most up to date City data, 90% of non-profit spending is concentrated in just 7 departments:
- Homelessness and Supportive Housing
- Public Health
- Human Services Agency
- Mayor's Office of Housing and Community Development
- Children, Youth & Families
- Economic & Workforce Development
- Early Childhood
Majority of Non-Profit Spending is on Homelessness and Health.
Two City departments stand out when it comes to non-profit spending: the Department of Homelessness and Supportive Housing (HSH) and Department of Public Health (DPH). Their non-profit spending combined is more than 50% of the City's total non-profit spending in 2025.
HSH's share of the City's total non-profit spending has noticeably increased from roughly 20% in 2019 to now 30% in 2025. Non-profit spending itself is actually the majority of HSH's budget, comprising 58% of the department's budget for 2025.
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What are we getting for our money?
Not as much as we should unfortunately. Oversight over contracts/agreements with non-profits has been weak, leading to multiple scandals and incidences of misused funds and outright fraud. Just a few examples:
- United Council of Human Services: Homeless non-profit investigated by City and referred to FBI.
- J&J Community Services: Faked invoices and billed City for inappropriate items such as cigars and liquor.
- HomeRise: Homeless non-profit caught mis-using funds on employee bonuses and salary raises among other misdeeds.
Increased spending hasn't produced better results.
Despite the City's budget growth, residents aren't receiving better services.
Notably, despite increased budgets for both the Department of Public Health and Department of Homelessness and Supportive Housing, departments which both deal extensively with homelessness, the total number of homeless people has increased in San Francisco.
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This spending cannot continue.
San Francisco faces a massive budget deficit of over $1 billion by 2030.
While the City projects the deficit at roughly $1.1 billion by 2030, when factoring in SFMTA's deficit, that figure could balloon to $1.5 billion by 2030.
This is not a sustainable situation.
And that's not even the only big problem.
San Francisco also has a massive unfunded pension and healthcare liability.
From the most recent San Francisco Employees' Retirement System (SFERS) financial statements:
- When using a more realistic 6.2% expected annual return (versus the target 7.2% annual return), the net pension liability balloons to over $9 billion.
- The net liability for Other Post-employment Benefits (OPEB) i.e. healthcare benefits etc clocks in around $3.9 billion.
San Francisco will need to confront these costs in the future.
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Major Financial Firms have already knocked down our credit rating.
In 2024, both credit rating firms Moody's and Standards & Poor's downgraded San Francisco's credit rating based on the City's dire financial outlook and precarious economy:
- Moody's downgraded San Francisco for the first time in 11 years from Aaa to Aa1.
- Standard & Poor's downgraded San Francisco from AAA to AA+.
The Facts are Clear: We have a spending problem, not a revenue problem.
San Francisco government already earns plenty of revenue, more than peer city-counties, U.S. states, and entire countries.
But it doesn't spend that money effectively.
And the City's own financial projections make it clear: government revenue is projected to grow (even when factoring in federal cuts) but spending is projected to grow much faster.
Unfortunately, last year's Budget did not solve the problem.
Although Mayor Daniel Lurie's first City budget did make some needed changes such as reducing City workforce and ineffective non-profit spending, it did not go as far as it should have to fully address the budget deficit.
At the end of the day, we're still facing an over $1 billion deficit by 2030 and we can't keep kicking the can down the road.
Now is the time to take serious action to fix our budget crisis.
That's why in this year's budget, we must not do three things.
Our elected leaders must follow these three clear principles to responsibly address our budget deficit:
- Do not use reserves.
- Do not use one-time fixes and shortcuts.
- Do not increase taxes.
These three principles serve as guard rails that City leaders must follow to ensure they actually address the City budget's core spending problem.
Reserves are meant for recessions, not structural problems.
San Francisco has numerous reserve funds which total around $1.4 billion. These reserve funds exist to primarily safeguard our City from un-expected drops in revenue, typically due to an external event like a recession.
That means these reserves should not be used for addressing structural problems with the City's budget that result from the City spending far more money than it brings in.
Additionally, it's important to remember that official City projections that show SF facing a deficit don't even factor in the effects of a recession. The City should not be draining reserves to solve an internal structural issue and then be caught off guard by an actual recession.
One-Time Fixes won't solve a long-term problem.
One-time fixes and accounting gimmicks fail to address the fundamental spending problem that is causing our City's budget deficit.
In fact, for the past few years City leaders have relied on one-time fixes to avoid taking the actual steps needed to solve the budget crisis. Former Mayor London Breed used Covid relief funds, reserves, and prior-year savings i.e. fund balance to paper over the City's structural deficit.
Even the most recent City budget under Mayor Daniel Lurie used budget sleight of hand. For years, the City has required small businesses to pay into the SF City Option program, which funds medical reimbursement accounts to help employees pay for health coverage. For the past few years, the program has had millions in un-used money, which arguably should have been given back to small businesses. Instead, in last year's budget cycle, the City shunted over $200 million from the program into the new Federal and State Revenue Risk Reserve.
If the City wants to actually fix the budget, it can't keep relying on one-time fixes and shortcuts.
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Increased Taxes don't solve a spending problem.
The projections are clear: San Francisco has a spending problem, not a revenue problem. Raising taxes or creating new ones doesn’t address the root issue.
In fact, new taxes could make the situation worse. San Francisco is still in a fragile economic recovery, and the City already has some of the highest business taxes in the region. A 2023 City analysis found that a large tech company would pay at least 20 times more in business taxes in San Francisco than in most other Bay Area cities.
Even after recent reforms, businesses here still face high costs. And we’ve already seen major companies reduce or relocate their presence in the past.
More taxes risk undermining the recovery. They raise the cost of living for residents and make it harder for businesses to stay or grow here. When businesses leave, the City loses more than business tax revenue - it also loses jobs, economic activity, and property tax revenue tied to offices and commercial space.
The result? A shrinking tax base and a deeper fiscal problem.
When you hear proposals like a parcel tax on homes or the so-called “CEO tax” (which is actually a business tax based on pay ratios that could raise taxes on some companies by up to 800%), it’s worth asking whether they solve the real problem or make it worse.
What you can do.
SF's budget problem is clear. Our City makes billions annually. Yet it spends far more than it earns. And it doesn't spend its money effectively.
Last year's budget didn't fix the problem. And we can't keep kicking the can down the road. That's why this budget cycle, residents have an opportunity to stand up and demand City leaders fix the budget crisis.
No draining of reserves. No one-time fixes and shortcuts. No new taxes. Just real reform and responsible budgeting.
Send a message to the Mayor and Board of Supervisors telling them to solve our budget crisis responsibly using the form below.
