San Francisco-Area Cities Face Precarious Budgets Amid Pandemic.

San Francisco and several neighboring cities are watching revenue slip more than expected, leaving local leaders grappling with whether the pandemic has permanently transformed their finances.

The effects vary. Oakland must make cuts to close a $62 million shortfall this year, while San Jose may cover its $10 million decline in general-fund revenue with reserves. San Francisco faces a $411 million deficit next year after having largely exhausted one-time measures.

Collectively, the results show that the region, a hub for the technology industry that drove California’s economic boom, is struggling with the multiple rounds of state and local orders imposing and relaxing business restrictions to combat the spread of the coronavirus.

The loss of revenue from canceled conventions to fewer lunching downtown workers also underscores the area’s vulnerability to the rise of remote work. San Francisco’s fiscal analysts last month warned real estate markets like theirs “face an uncertain future” should workers fail to return to their offices as they did before the pandemic. On Tuesday, Salesforce.com Inc., San Francisco’s largest private employer and occupant of its tallest tower, said it would permanently embrace more flexible work policies even after the pandemic ends.

That compounds the difficulty facing municipal leaders, who can’t predict virus surges and further mandates restricting activities, as they craft budgets. At the same time, companies are still mulling their policies on what kind of workforce and space they should have after the pandemic eases, said Greer Cowan, a research analyst at the Bay Area Council Economic Institute, which focuses on the nine-county region.

“There’s so much uncertainty surrounding when it’s safe to return to the office and, additionally, both business and employee preference around when they want to return and if they want to return to the office that it makes sense that cities are having a hard time getting a grasp on it,” she said.

Municipal-bond analysts are closely watching if anecdotal evidence of workers leaving expensive cities such as New York translates into permanent hits to their economies. Credit rating companies S&P Global Ratings and Fitch Ratings cut their outlooks on San Francisco’s ratings to negative from stable, reflecting uncertainty about its recovery given changing work habits and pressure on commercial real estate and tourism.

Here’s a snapshot of fiscal conditions by city:

San Francisco:

San Jose:

Oakland:

Mountain View:

Bloomberg Politics

By Romy Varghese

February 10, 2021, 10:30 AM PST



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