New Budget Preserves Services, Cuts 1400 Positions, Closes $817.5M Deficit

The Mayor's office has released a new budget proposal that closes a $817.5 million deficit without sacrificing core services. The $15.9 billion budget includes structural cuts, eliminates 1,400 positions (most of them vacant), and sets aside $400 million in reserves to protect against federal and state budget volatility. It will now be reviewed by the Board of Supervisors, who may make some limited changes before it is finalized.

The facts

Mayor Lurie's $15.9 billion budget for FY 2025-26 and 2026-27 closes an $817.5 million deficit without sacrificing core services. To do this, the city is making structural cuts—eliminating over 1,400 positions (most of them vacant), trimming underperforming contracts, and ending the unsustainable practice of using one-time funds for ongoing costs. The proposal also sets aside $400 million in reserves to protect against federal and state budget volatility.

You might ask how cutting vacant positions saves us money, and that's a good question! It's because the city must fund an account to pay for those positions once they are filled, so even an empty seat costs money. By eliminating these positions, the city can stop funding them, and instead use that money to pay for other services.

Budget overview

Public safety funding

Public safety remains fully funded. There are no cuts to sworn officer staffing in the Police or Sheriff’s Departments, and four new dispatcher classes will expand 911 capacity. Legal protections for immigrants and LGBT residents remain in place.

Homelessness & behavioral health

To tackle homelessness and the behavioral health crisis, the budget unlocks $90 million for new interim housing, with support from the $37.5 million Breaking the Cycle Fund. New legislation will allow repurposing of unspent Proposition C funds to meet urgent street-level needs.

Clean streets investment

The budget also protects and expands street cleaning, avoiding service cuts while hiring additional cleaning staff and launching new public-private cleaning efforts across seven neighborhoods. Ambassador programs will be expanded and centralized under a more coordinated model.

Economic recovery initiatives

Economic recovery is another pillar. Mayor Lurie’s proposal funds small business fee waivers, revitalizes vacant storefronts through SF Shines (a new storefront improvement grant program), and establishes a new agency to support arts, culture, and film. Early childhood education funds are safeguarded, and downtown activation events will continue to receive support.

Capital and technology

Finally, the budget makes strategic long-term investments in capital improvements and technology. It allocates $132 million across fire stations, street infrastructure, and shelter facilities, and $50 million for 22 tech projects, including a street outreach tool and a new property tax system.

The context

San Francisco’s budget has ballooned over the past decade—from $9.1 billion in 2012 to $15.9 billion today, adjusted for inflation. That’s a 54% surge in spending, even as the city’s population fell by 45,000 residents since 2019. In fact, San Francisco now spends $12,100 per resident, nearly double the $6,300 average of peer consolidated city-counties like Denver and Philadelphia.

Staffing is part of the story. Since 2012, the city added over 7,000 positions—a 27% increase—even though our population is back to 2012 levels. Today, San Francisco employs 22,000 people in core functions, with average compensation of $205,000, the highest per-resident cost among California cities. Nearly 60% of city employees live outside the city, and one in four work from home two or more days per week.

The budget also reckons with San Francisco’s expanding contract and grant system:

• $5.8 billion in active contracts across 10,900 agreements and 4,000 vendors.
• $1.6 billion in annual grants—up $1 billion since 2018.
• 36% of the city’s largest vendors (>$100M contracts) are nonprofits, some with lapsed state certification.

Departments like Public Health and Homelessness have seen some of the sharpest cost increases:

• DPH: Grew by $871 million since 2012 to $3.2 billion, driven by 1,200+ new employees and a 39% increase in behavioral health contracts.
• HSH: Created in 2016, now at $835 million annually, with funding concentrated in Housing First strategies.

Mayor Lurie's budget takes a sharp turn from these trends by cutting costs, consolidating contracts, and shifting to performance-based funding.

The GrowSF take

San Francisco’s budget is now bigger than 17 U.S. states. For too long, that money has been spent without clear accountability and outcomes have suffered. Mayor Lurie’s budget is a necessary course correction: real cuts, real reserves, and real prioritization of safety, cleanliness, and recovery. We all deserve a safe, clean, and accountable city, and this budget sets the tone for lasting reform.