Controller: Dire Financial Warning Is No Political Ploy

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Yesterday, SF Weekly broke the news that the city's finances are in such bad shape that the controller has forbidden the mayor or supes from making any expenditures not previously budgeted; the controller cannot guarantee the money is there. Yes, it's that bad.

This takes the wind out of the sails of the Progressive Armada, which had been planning a showdown today regarding legislation that would have spent around $8 million to stave off layoffs of union health workers and rescinded pay freezes. Now, noted Deputy Controller Monique Zmuda, the supes are forbidden from passing such measures unless they hack an equivalent amount out of the city budget or devise revenue-boosting measures (fees or taxes).

It didn't take long for accusations to be made that this cry of insolvency was a veiled political move. SEIU organizer Robert Haaland commented on SF Weekly's Web site that "I smell not only one rat but several." Supervisor John Avalos, author of some of the union-friendly legislation, complained to the Chronicle that the controller's report was "a little bit cooked" and included totals that were harmful to his cause and left out totals that were beneficial.

Zmuda told SF Weekly she can't remember the last time her office was accused of playing partisan politics. She methodically explained that the smell of rodentia isn't emanating from our city -- that's the odor of nightmarish financial shortfalls.

While Avalos argued that the controller was making things out to be more dire than they really are by including the $8 million in proposed city union bailouts as if it had already been spent, Zmuda noted that "we had to include it because it was part of the board process and supplemental [expenditures] under review. With all of our status reports, we include any legislation to spend money." In other words, this is standard operating procedure.

Haaland, Avalos, and others inclined to spend money to aid unions and union workers are eager to bring up recently passed Assembly measures that figure to bring $34 million in Medicaid funds to the city. Once again, however, Zmuda explains that this was not an oversight. This process has not yet been completed -- the federal government still has to approve the plan to charge fees on private hospitals, match those funds with federal dollars, and have the state send the money back toward cities.

"These processes generally take months," notes Zmuda. "So the controller cannot certify this money yet because the federal government has not approved the program, the state is not collecting the fees, and hasn't hired the staff to administer the program. The program is still in the planning stages. Once we get a letter from the state identifying how much money we'll get and when, then we can certify the money."

Finally, Zmuda defended the controller's estimate of $35 million in shortfalls based on evaporating property taxes. While her office didn't assume every property owner's appeal will be granted by the assessor, if most of the multi-million dollar commercial properties are re-evaluated downward, that'd be well enough to eviscerate the city's tax revenue.

"This is not a political move," Zmuda says. "The controller's office did a rigorous review of its revenues and its expenditures, including over-expenditures incurred by city departments. We've notified the mayor and board we have a deficit and we're urging them to address this deficit. And until this happens, we cannot certify the use of any General Fund reserve."

In other words -- balance the budget, or else. 

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