Supes Getting Played on Mid-Year Budget Cuts

by Paul Hogarth, 2008-11-24

“The Mayor proposes and the Board disposes,” said Supervisor Aaron Peskin at a Board meeting in June 2007 – reminding colleagues that the two branches of government are co-equal when it comes to passing a budget. But Mayor Gavin Newsom, who has once again proposed mid-year cuts that adversely affect health care for the indigent, acts like it’s not true. Virtually all cuts restored last summer by the Board are back on the chopping block – with Health Director Mitch Katz admitting they prioritized them as the first to go. Unilateral mid-year cuts also violate the City Charter, as only the Controller can “freeze” funds during a fiscal emergency – so the Mayor must get Board approval for it to happen. But the Mayor-appointed Health Commission reviewed all these cuts at an Election Day meeting (when everyone was distracted), and most will take effect on January 1st. There is no reason why these cuts must go into effect now – with four new Supervisors taking office January 8th. And with the state legislature in special session to deal with the fiscal crisis, making immediate cuts at the local level is excessively premature.

One would think that, in times of fiscal crisis, the City would conduct a comprehensive overhaul of its budget – with all stakeholders at the table – to come up with only the most necessary cuts. Instead, we have Mayor Newsom unilaterally re-introducing the same cuts to public health programs he’s tried to slash before – such as the SRO Collaboratives and psychiatric beds at SF General Hospital. With the financial crisis and the horrific cut proposals coming from the state government, Newsom asked each Department to issue a “mid-year reduction plan” – which the Health Commission chose to review on Election Day.

In his report to the Health Commission, Director Mitch Katz noted that the City cut $30 million out of public health in its last budget – and the Supervisors saved an extra $18 million in cuts through the add-back process. Katz admits that in preparing for mid-year cuts, the Department’s recommendation “focused on those items” which could have been cut – but were restored by the legislative branch through add-backs. In other words, it doesn’t really matter what the Board “saves” during budget season when all the service providers go to City Hall and plead to keep their programs. If your program didn’t get slashed in June, you’ll just have to come back in December when it gets cut again.

There’s something wrong with this picture when the Health Department puts the Board’s funding priorities beneath what the Mayor wants. Technically, the two branches are co-equal – and programs saved through the add-back process should be given equal weight and consideration. But with the Mayor appointing a Health Director (and all members of the Health Commission) who pushes a certain agenda, Supervisors are forced in a reactive pose where they must scramble for crumbs just to maintain the status quo.

And there’s no legal basis for the Mayor to impose unilateral “mid-year” cuts. Only the City Controller – under Section 3.105 of the City Charter – can intervene when the fiscal situation gets sour, and determine “what is best” to keep the money flowing. If revenues suddenly take a nosedive so that the City cannot spend appropriated funds, the Controller can “reduce or reserve an appropriation” – and must then inform the Mayor and Board within 24 hours. But besides this emergency provision, the Mayor himself cannot impose “mid-year” cuts without say-so from the Board of Supervisors. Newsom is just using the fiscal crisis (real and threatened) to pressure the Board into going along with these cuts.

Hopefully, the Board will show resolve and refuse to go along. But Newsom also picked the perfect time to ram this through when they can’t do much about it. First, the Health Commission initially reviewed his directive at their November 4th meeting – on Election Day, when control of the Board majority was at stake. Second, the Board only has three full meetings between now and the end of December – and among their distractions is the mammoth Eastern Neighborhoods plan. The Budget Committee isn’t meeting this week (due to Thanksgiving Holiday), so it’s hard to see how they can vet these cuts – most of whom would take effect on January 1st – under pressure of an ominous budget deficit.

Because these cuts can’t happen without Board approval, the Supervisors should insist on postponing any decision until after January 8th – when four new members will be sworn in. At that point, a more deliberate decision process can occur – where all City elected officials can reasonably assess how we’re going to “spread the pain” in this grim financial crisis. No one’s denying that mid-year cuts have to be made, but it’s not equitable for the executive branch to unilaterally set the frame of what cuts are involved.

The Mayor insists we must act now – due to budget cuts from state government that will trickle down to the local level, de-funding City programs that rely on state revenue. But as long as the legislature remains in a special budget session negotiating with Arnold, it is premature for the City to pursue these mid-year cuts. The situation in Sacramento is volatile, and alarmist talk about draconian cuts may or may not become a reality. Imposing local mid-year cuts right now, and in this manner, is simply unwarranted.