Congratulations Mayor Lurie! Now the Work Begins!
Critical Steps to Budget Reform
• • • • • • • • • • January 2025 • • • • • • • • • •
Congratulations on becoming our new mayor. Now, the work begins to bring our City back to its greatness. We need to end government waste, unneeded bureaucracy, and patronage. You have an opportunity to run City Hall as a business with accountability, transparency and integrity.
You need to clean house in order to do this. I recommend the following:
1 - Perform a Zero-Based Budget (Priority on Public Safety)
Over the next two years, our City budget deficit is projected to be close to $1 billion. A recent Civil Grand Jury report noted, "After years of robust economy, the City faces constrained economic growth. In this challenging environment, San Francisco must carefully manage its labor, health and pension costs while considering potential reductions and exploring new revenue sources." The report also noted that "the City's budget oversight responsibilities need to be reviewed to improve their effectiveness."
This is the perfect time for the City to do a zero-based budget and be made accountable. In a zero-based budget, all expenses must be justified starting from zero. However, I recommend a zero-based budget, not from scratch but from a specific point in time, such as 2010, when there was a financial crisis in our nation and our City had to cut back. In 2010, the City budget was $6.6 Billion with approximately 27,000 employees. In 2024, the budget is $15.9 Billion with 35,500 employees, 8500 more than in 2010.
Suppose employees and departments are to be cut. In that case, the City needs to prioritize and ensure the full funding of vital services and programs such as our police, fire, and public health before lower priorities are funded. Our City safety is crucial. All lower-priority departments, programs and services are on the table, especially those that have been added since 2010, including non-profits.
The purpose of government reform is to reduce government waste and deliver services efficiently and cost-effectively. For example, the City Administrator does not do this. The recent Civil Grand Jury Report noted that "the duties of the City Administrator are ambiguously defined and need more clarity.”
2 - Identify Missed Revenue
The recent Civil Grand Jury report noted that our City must explore new revenue sources. I recommend that all revenue-generating departments audit their practices to ensure all revenue sources are addressed. I guarantee they are not. I have told mayors and the current assessor that the City did not pick up hundreds of millions from missed assessments. None were interested. A representative from the San Francisco Standard was interested, and I worked with him on an article that came out this past September that pushed the assessor to assess Salesforce's naming rights at the Transbay Terminal.
The Assessor's Office is responsible for identifying and appraising all real and business property within the City and County of San Francisco, fairly and equitably, as applicable by law. In California, any private party that leases, rents, or makes payments for private benefit for the use of government-owned property is subject to property tax called Possessory Interest Tax.
In 2017, Salesforce paid $110 million for naming rights for the park and transit center (formerly the Transbay Transit Center) for 25 years. The Assessor can go back 8 years and appraise accordingly reflecting approximately $10.4 million in currently missed revenue ($110 million x 1.1792% unsecured tax rate for 2016 = $1,297,120 annually x 8 years).
This is one among hundreds that the City is not picking up that would result in at least $200 million in revenues from currently missed assessments, taxes and fees.
3 - Audit, Audit, Audit
Work closely with the Controller's Office in the audit of the Dream Keepers, non-profit agencies and city contracts to ensure that services are provided and determine if they are necessary, especially those providing homeless services. This includes the review of Community Benefits for the Bayview neighborhood provided by the PUC. We must ensure that city contracts are entered into and followed through with the utmost integrity.
4 - Overhaul the City Charter
The purpose of government reform is to reduce government waste and deliver services efficiently and cost-effectively. For example, the City Administrator does not do this. The recent Civil Grand Jury Report noted that "the duties of the City Administrator are ambiguously defined and need more clarity." The Board of Supervisors agreed with the report that "The roles and responsibilities of the City Administrator are not clearly defined."
But what we do know is that the City Administrator continues tiers of bureaucracy that are not needed and remains a patronage position/department that needs to be eliminated from the Charter. The elimination of this department would eliminate dozens of redundant and unnecessary positions and save millions.
The City Administrator, who was previously the Chief Administrative Officer (CAO), was created by the then-new 1932 Charter due to the corruption in the City at that time, especially in the Election Administration. The 1932 Charter abolished the prior Board of Elections Commissioners and vested responsibility for the administration of Elections into the Registrar of Voters under the newly created CAO. The CAO was responsible for all affairs placed in their charge by the provisions of this charter and those adopted by ordinance.
Over the years, the CAO was assigned the Department of Public Works, Waste Management, Building Department, Airport, Health, Registrar of Voters, etc. However, all were removed to become stand-alone departments.
The voters adopted the 1996 Charter, eliminating the CAO position, and created a City Administrator with a shorter term. The CAO was eliminated since it had outlived its purpose, and its bureaucracy could effectively be pared down and integrated with other departments. However, all the 1996 Charter did was change the title. The purpose was to streamline government — not just change a position title and arrange departments like musical chairs in order to justify an unneeded City Administrator position paid $441,000 per year, including fringes.
The Department continues the unnecessary levels of bureaucracy (As you can see by the Chart below). For example, the Treasure Island Development Authority (TIDA) has a Director and an Assistant Director who report to a seven (7) member board, who reports to the Deputy Director under the City Administrator, who reports to the City Administrator, who reports to the mayor, who appoints them. TIDA was a stand-alone department years ago and should continue as a stand-alone department. It does not need the City Administrator's oversight. Further, TIDA has a seven-member board.
The following are examples of departments currently under the City Administrator, like TIDA that should be and are currently set up as independent departments and do not need redundant oversight by the City Administrator:
- Animal Care and Control
- Real Estate
- Department of Technology which would include COIT (Committee on Information Technology), DataSF, Digital Services, ReproMail. Years ago, this department was under the oversight of the Controller's Office.
- Department of Contract and Grants Administration (Purchasing), which includes Contract Monitoring, Fleet Management, and Labor Standards Enforcement.
The following currently under the City Administrator should be merged into other departments:
- County Clerk into the Assessor Recorder's Office - The County Clerk issues marriage, birth and death certificates, City IDs, notary services, etc. Marriage licenses are maintained by the Recorder. Therefore, like other Bay Area Counties, the County Clerk should be merged and become the Assessor/Recorder/County Clerk.
- Medical Examiner into the Health Department
- Mayor's Office on Disability into the Mayor's Office
- Grants for Arts into Arts Commission or under a new Department of Contract and Grants
- Office of Cannabis under the Mayor's Office
- Transgender Initiatives, Civic Engagement & Immigrant Affairs under the Mayor's Office or Human Rights Commission
The City Charter, which is the City's Constitution, has not been overhauled in nearly 30 years and needs to be revisited. A proposed Charter overhaul needs to include the elimination of the City Administrator, since the position/department is unneeded and would remove tiers of bureaucracy and related staff, resulting in millions in savings for other much-needed City purposes. Even the Civil Grand Jury and Board of Supervisors couldn't clearly define what the City Administrator does.
5 – Commission Review and Reduction
Reduce the number of Commissions to meet the needs of our City best.
6 - Review all our existing City computer systems
Review all our existing City systems to see how tech-savvy we can be. We have the top tech minds of the world in our neighborhood, so let's take advantage of this to benefit our city.
For example, the Assessor's Office is currently working on a new system that is delayed and over budget, and it needs to be audited. As an Assistant Assessor, I spent over five years developing and implementing the Assessor's existing assessment system, which revolutionized how valuations and ownership transfers are processed. When this system went live in 2000, we picked up over one billion in assessed value from values that had fallen off the assessment roll or were not calculated correctly. That resulted in over $10 million in additional annual tax revenue for the City.
We don't need another boondoggle like the SF Unified School District payroll system.
7 - Homelessness
We watch as our City slides due to a lack of vision and direction. The extent of the crime, drugs, and homelessness our visitors, residents and businesses have to deal with every day is unacceptable.
So what do we do? How do we protect our society and, at the same time, show compassion to those who are sick and struggling? We cannot ignore or arrest our way out of this. People are dying, and there is something we can do. It is inhumane to continue allowing this.
Since our City has no rules, the homeless can come and go as they please. The majority of homeless are over 40 years old. We need to enforce our quality of life laws while providing services to these people who desperately need them, especially our veterans.
For those who have a mental illness and for the drug addicted, especially those who have overdosed, I recommend the mayor and our supervisors pass an ordinance that provides that if anyone on our streets is incoherent and not of sound mind, then they will be taken to a treatment center to be evaluated and helped for at least the next 30 days.
So where do we take them? We need treatment centers where doctors, counselors, and caseworkers are available, along with the treatments we know work to save lives. There are 25 million square feet of vacant commercial space available. Many of these spaces could provide treatment centers, shelters or housing. The City must treat the mentally ill and drug addicted accordingly and send them back home. Such a joint effort could benefit our City and the property owners, turning these people's lives around and cleaning up our City.
Where will the money come from to do this? A zero-based budget. The Board of Supervisors, in conjunction with the Mayor's Office, should immediately direct the Budget Analyst to conduct a zero-base budget. The last zero-based budget was during the Willie Brown administration.
There is also a lot of goodwill in our tech companies as well as others. These philanthropic companies are concerned and care about our City problems. Suppose we have a business plan to address our homeless situation throughout the City. In that case, I know these companies, along with many others, would rise to the occasion to assist our brothers and sisters in need.
8 - Vision for the Future
Our City was last to come out of the pandemic because it had no plan or leadership for the future. There are many ways the City can move forward with a vision of the future.
For example, the only way to get to Treasure Island is by car or ferry. BART goes right by Yerba Buena, but no station was established there. (The Navy wanted the security.) There is an opportunity to put a station there and make Treasure Island a more viable neighborhood—just one of many overlooked opportunities for our City.
Mayor Lurie, like you, I love this City, but business as usual has to change.
All the best.
John Farrell Broker/Realtor® – Farrell Real Estate, MBA, Former Assistant Assessor – Budget & Special Projects, Westside resident - farrellreinvestments@yahoo.com.
January 2024
