Breaking: Controller Reveals City Has No Money for Additional Expenditures -- City 'Cannot' Spend More Without Cutting

In a chilling move, the city controller's office announced it will formally rescind its certification of any supplemental expenditures by the city -- in plain English, there's no money and the Board of Supervisors can't spend any more unless more revenue comes in or the current budget is cut. 

"We're going to decertify the supplementals," confirmed deputy controller Monique Zmuda -- who had no idea when the last time was the city was forced to take this drastic a financial step. This means that the Board of Supes "is not able to act on legislation tomorrow" that would call for additional city funds to be spent. Quite simply, the money is not there; like dealing with a full e-mail inbox, the city cannot spend any more money unless it makes room by cutting the budget or crafting new revenue-generators.

Here's the back story: Several weeks ago, Supervisors John Avalos and Chris Daly introduced legislation that would have cost the city roughly $8 million dollars but staved off layoffs and reversed pay cutbacks in the health department. At the time, the controller's office had not researched the availability of the necessary city funds to pay for such a move. Now, however, the data is in -- and it's horrific. Due largely to huge shortfalls from reduced property taxes and evaporating payroll taxes, the city is $53.1 million in the hole -- and carrying only a $25 million General Fund surplus.

So when Avalos' and Daly's legislation comes up Tuesday, "procedurally there are any number of things they can do -- but they cannot pass it," warns Zmuda. "They can continue it or table it. They can continue it until other cuts are made." 

The pending decertification letter should "trigger to the mayor that he needs to cut spending or needs to find alternative measures to balance the budget," Zmuda continued. "The mayor and board are required to take action." Furthermore, the city charter stipulates that the supes cannot appropriate any money without the controller's certification that said funds are available -- and now that certification has been whisked away.

Meanwhile, the $45 million from the city's largest departments that the supes placed in contingency during the latest budget battle is off the table when it comes to addressing this shortfall, according to the controller's office. "That money is needed to continue to fund the current level of police and nursing, etc. It's earmarked for the current workforce," explains Zmuda.

"When the Board of Supervisors put that money on reserve, it means that those departments have to come back to the board to get those funds released. This is not 'extra money.' If that money is used for something else, there will be major layoffs in all those departments."

Supervisor Ross Mirkarimi said this move essentially puts the city back to the drawing board when it comes to structuring its budget.

"Whatever handshakes and negotiations took place, all that is now practically undone," he said. "We are $28.1 million below our reserves. We are in dangerous territory. We need to be operating fast to make up for that shortfall and to prepare for what promises to be a very troubling deficit."

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