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Wednesday, December 10, 2008

"......." - Gavin Newsom's State of the City Remarks About the Deficit

Posted By on Wed, Dec 10, 2008 at 11:01 AM


By Benjamin Wachs

Yesterday, Gavin finally proposed something vaguely plan-like to try and deal with the city's looming deficit - but in last week's State of the Citysode on the Economy, Gavin couldn't even bring himself to use the word "deficit," let alone say how big it was.

In fact, according to this half-hour speech, the economy is doing great -- he's amazingly upbeat. So upbeat that he spends more time talking about 311 than he does the "current fiscal shortfall" in the budget that he only mentions twice.

It got so frustrating that I actually called 311 to see if they could tell me what the city's projected budget deficit is. (It's not a secret - the media's been all over it).

To find out what happened, keep reading.

00:00 - Gavin Newsom starts off by saying that "Everybody is talking about the economy." But then he decides to be upbeat. "San Francisco continues to outperform peer cities. The fact is, in San Francisco, in almost every key sector we're continuing to do more and do better than the rest of the state and the nation."

Fantastic! So, we have no huge deficit to worry about then?

00:51 - "That being said, we're not naïve that things may be challenging, or challenged, in the upcoming months. In fact, we'll talk a lot about that in the upcoming slides."

Using the slides is the equivalent of sending facts to Siberia.

01:30 - But Gavin is still upbeat. Do you know that there's a lot less office vacancy in San Francisco today than there was in 2003?

Yeah, 2003. Where did that date come from?

02:10 - Gavin is still upbeat.

03:00 - He's still talking about how little office space there is in the city now, because lots of companies have moved in.

03:51 - AND we had a record number of visitors to our city! Everything in San Francisco is great! So, we have no huge deficit to worry about then, Gavin?

04:29 - AND San Francisco has tons of convention bookings!

Gavin is concerned, though, that we might not be able to keep that record up. BUT, he's positive. "The reality is, the last four years, and all the available data to this moment bears out, that we're going to experience arguably another record year."

Man, this economy is red hot! There couldn't possibly be a huge looming deficit! Could there Gavin?


Anything ... to say about the deficit at all, Gavin? No? You're busy talking about all the flights in and out of SFO? Okay.

05:48 - Our hotel occupancy rate is nearly 80%. Gavin calls that "a robust hotel industry."

So, nothing to worry about then.

06:46 - Gavin is a little embarrassed about having so much good news to give us. "Hate to admit, I don't want to just give all good news on the economy. But look at the retail sales growth!"

Take it easy, Gavin. I'm sure there's some bad news on the San Francisco economy somewhere. Somewhere. Hiding among the numbers.

07:37 - Gavin finally puts out the "Red flag of caution."

"But despite that relatively good news, no question that we're not immune to the macroeconomics. Not immune to the credit crisis, not immune to the housing crisis and the like."

We know it must be serious. "You see a lot of red on this slide," he tells us. Which is not technically true, but I'll take his word for it. What's the bad news, Gavin?

Is it a huge, mounting, deficit? Is it? Is it?

No, but there is "slower growth" on many taxes. "The only thing that's holding strong is the utility users tax," he says, laughing.

What's so funny about that? Do you get it?


08:18 - "The one that I'm most concerned about is real estate transfer tax."

Why? Will it cause a deficit? A deficit? A deficit? That word you haven't said yet?


09:13 - "That creates economic uncertainty, that makes us very cautious about the budget we just passed."

Yes? Yes? Why, Gavin? Why?


09:42 - "This creates the conditions of uncertainty, which create more pressure on our current budget. That means we need to augment the budget we just passed. And that's why we will be making some tough choices that I want to talk about in some of these upcoming slides."

Okay Gavin! Tell us about the tough choices we'll have to face!


09:57 - "But let's talk about what we've done."

Oh, Gavin! So close!


10:09 - The city has made a hiring freeze, frozen discretionary spending, pushed down overtime (uh huh), frozen discretionary bonuses, vehicle fleets are being reduced, cell phone usage is being limited, energy and water consumption is being reduced.

Oh, so, if we're looking at things like cell phone usage, we must be talking about a deficit of only a few million. Right Gavin? Right?

It's a number, Gavin, you love numbers. Why not tell us how big the deficit is projected to be? I assume someone's told you?

It's in the paper. Do you read that?


11:01 - Now he's talking about Civil Service reform. We now (he says) require performance reviews and satisfactory performance before people get promoted.

In Gavin's mind, this means production will rise, thus saving a lot of money.


12:00 - The city has also consolidated 14 departments and eliminated 4. Out of how many, Gavin?

He doesn't say. Frankly, I doubt anybody knows.


12:29 - "We've increased the number of audits in city government from 48 to 67."

Oh, if only anyone ever listened to them.


12:46 - Somehow, Gavin is now talking about 311. "The power of one, we call it."

Shouldn't that be the "power of 311?" Oh, nevermind.


13:24 - He's still talking about 311. "It's not just a glorified switchboard," because they can follow-up on work orders to see how many are completed.

Uh huh. Hey Gavin, do we have a deficit? I'm just asking because it's now been 14 minutes, and you're still talking about 311.

Do you think if I called 311 I could find out how big the city's deficit is?

It's 12:08 a.m. as I write this, and I call 311. After pressing 1 for English, and 2 for non-MUNI related calls, a nice woman named Barbara asks if she can help me. I ask for the city's current and future projected deficit numbers. There's a short pause, after which she asks if she can put me on hold while she gets this. I say sure.

The hold music is smooth jazz. I hate smooth jazz. I mean, what is that, anyway? What is 'smooth jazz' but music that people actually listen to made more palatable for people who don't really want to listen? Jazz as most people hear it today is more a creation of white academia than working black musicians.

(Still on hold.)

But what's even more pernicious is the way jazz's co-option by white record companies is effecting the recollection of its history. The fact that virtually no jazz teachers at the graduate level have ever been working musicians is having an enormous effect, since jazz history was traditionally passed down through the club scene, by working with the musicians who worked with the musicians. Take that away and there's nothing to replace the oral history.

(Still on hold.)

Working jazz musicians formed a small and tightly knit society and plagiarism, for example, was prevented because everyone knew who had made each innovation and wouldn't let you get away with performing in that style without giving credit. In that way it not only enforced honesty, it encouraged individuality. You had to be original to make your mark...

Barbara comes back and says that she's going to give me the number for the City Controller's office. It's 415 - 554 - 7500. Their hours are Monday through Friday, from 8 - 5.

Well shit: I still don't know what the deficit is, and now 311 has failed.


14:53 - San Francisco has initiated a "multi-year reform" of its "human resource information management systems."

"Tens of millions of dollars are being invested in this." "We're in the middle phase of this multi-year phase."

He doesn't actually tell us what it will do, but this is "Project eMerge," which I've written about here.

The name "Project eMerge" emerged (ahem) out of a city administration "Name that project" contest. (This is true) According to its mission statement, which by my rough calculation cost some $2 million (maybe not true), Project eMerge will:

"(A)chieve operational efficiencies across all City business processes and systems with the acquisition, configuration and deployment of a dynamic and comprehensive human resource management system that enhances and improves workforce management and helps ensure the highest quality of service to the public."
Which, to the extent that actually means anything, is good. But weren't we talking about a deficit?

I could swear.


15:43 - "One of the biggest issues of our budget is unfunded health care liability."

Oh! This sounds promising! There could be a deficit lurking around here!


16:15 - "We do an extraordinary job investing in people's pension and retirement, in terms of their versions of 401k's."

Really? How's that doing now?


16:50 - "The city has begun to tackle the issue of unfunded liability," through recent reform establishing a pay-in model.

Oh. So ... there's no need to worry about a deficit here.


18:12 - Our Rainy Day Reserves are now up over $100 million. "That's why our bond rating, in this climate, our bond rating just went up in San Francisco, remarkably. Our bond is now going up at a time when we need to invest in an economic stimulus."

OH! So, we're going to have an economic stimulus package? Are we? What will we invest it in, Gavin?


He says: "We need to be rebuilding our parks, playgrounds, water and sewer systems."

Oh - so, all that stuff we were planning to do anyway. You're talking about that. Okay, I thought you were going to do something new, or...something.


18:54 - "High reserves, good fiscal discipline, budget growth that's not profligate and not out of control, and now puts in in position where our bond rating is increased in spite of the macro economic climate."

Oh. So, I guess everything's fine, then.


19:15 - AH HAH! We're going to be making "$75 million in adjustments that we'll be making at the end of this calendar year."

This MUST be the good stuff! Tell us where the cuts are going to come, Gavin: we've all been waiting for so long!

He says:

"We're going to continue those non-essential hiring freezes, we're going to delay or eliminate some programs that have been funded but haven't actually spent the money, meaning we have a program that in the last fiscal year we set aside money but they haven't gotten the program rolling, we're going to hold back that program in order to reduce the cost of government; we're going to freeze some capital investment, but we're going to very strategic about that, we'll talk about that in a minute, and then we're gonna look at other savings ideas that we've had in the past."

Oh. Well, as long as you're going to be strategic about it. That's all anybody needs to know.

There may or may not be layoffs.

Thanks for being so specific.


20:40 - Other REALLY SPECIFIC budget plans he tells us about in order to combat the deficit he hasn't mentioned yet:


"We're going to look at diversification of our tax base, we're going to look at spending and revenue growth over the past decade so we can really get a sense of where we're out of kilter and where we're in a framework of appropriateness, where we've outpaced etc.. That's something I'm looking forward to."

Oh, me too.


21:01 - He still hasn't said "deficit," but he has ... at 21 minutes into his discussion of the economy, referred to a "current fiscal shortfall."



27:04 - "but how do you address a current fiscal shortfall beyond just cuts?"



21:07 - "I come from the private sector ..."

That's ridiculous, Gavin: everyone knows you were grown in a vat.


21:22 - "We can grow. It's not conditions that determine our fate, it's our decisions."

Now he's back to being upbeat.


21:36 - "So it's the decision to do more and do better. To come up with our own local stimulus plan that I think will play great dividends."

And that's it, kids. That's the discussion of how San Francisco will get through our fiscal crisis.

Got it?


22:15 - We need to invest locally. Keep your dollars local!

Of course, if everybody did that none of those businesses would be coming to San Francisco, filling up our office space. Maybe "Buy local" isn't a great motto for an economy desperately trying to be international.


23:30 - "We want to focus tourism more locally."

Um ... once people come to San Francisco, aren't they pretty much local?


23:30 - This is bizarre.

"Just the other day we kicked off ... the first time in 103 years, we lit up market street with some holiday lighting. Hadn't done it in 103 years. The reason we did it is: we want to remind people of San Francisco!"

WHAT? How does lighting up Market Street help "remind people of San Francisco?"

How many people walking down Market Street is he worried will suddenly think "Shit, am I in Santa Fe?"

It gets worse. When Gavin says "we want to remind people of San Francisco," what's he talking about? This next quote is an immediate continuation of the previous one. He says "Remind people of San Francisco!" and then immediately says:

"The new Bloomingdales. The new Barneys. The new DeBeers. The new Prada store. The new Gucci store. The new Nordstroms facility. The whole investment that has been made over the last four years really coming together. A whole constellation of things coming together to make our shopping district in Union Square truly world class! You don't need to go to New York! You don't need to travel to other parts of the country to get one of the best shopping experiences anywhere in the world!"

So ... to "remind people of San Francisco," we need to make them think about a whole bunch of non-local stores ... after we've reminded people to shop locally?

Has he really thought this through?

If people want Barneys, Bloomies, or Gucci, they can visit New York. Or London. Or Paris. Or Milan.

What ever happened to supporting small, local businesses?

For that matter, how does a massive shopping district filled with out of town high end chain stores square with his mission to have 0% waste by 2020? And how does lighting up the streetscape help reduce emissions?

Gavin's plans - for everything - are falling apart as he tries to hold everything in his grip.


24:32 - "We're creating a new Tourism Improvement District."

Which, as I've written about here, is in fact the entire city. The whole city is becoming a special use district - for tourism.

And all of the things he's talking about, these major initiatives, are headed straight downtown. Union Square, Moscone, Yerba Buena.


25:45 - NOW he talks about how diversity is our strength. "We want to continue to invest in the unique character of our districts and neighborhoods."

Nice thought, but after that huge peon to downtown, I don't really believe it. You can't say Boomingdales is San Francisco, and then convince me you're really interested in supporting Bayview-Hunters Point's diversity.


27:42 - "This is not a time to raise fees and fines on businesses. This is not a time to raise taxes on businesses."


30:06 - At this point half of the city, the Eastern half, is a giant enterprise zone. How odd, given that the puprose of Enterprise Zones is not to support strong existing districts, but to encourage investment in underdeveloped areas. I know Bloomingdales is the soul of the city, but does it really need tax breaks? I hear they're doing well.

The rest of the video is blah blah blah.


33:53 - "All told I think the city, under the circumstances, is doing remarkably well."

Yes, he admits there will be challenges. But he's still never mentioned a "deficit," let alone an amount, and he's only mentioned a "current fiscal shortfall" twice.

As if to make up for this, he closes with something much closer to what San Franciscans would have liked to hear him say up front:


34:23 - "We've got a lot of work to do, under very trying and difficult circumstances, and we want to make sure that whatever we do with our budget, that we're there for those most in need. And I know it's going to be a difficult thing to prove, it's going to be a difficult thing to assert, but I know it's going to be something in the next budget cycle that we're absolutely committed to."

If by "we" you mean Gucci.

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