SAN FRANCISCO—On Tuesday, May 8, San Francisco Mayor Mark Farrell revealed the next steps in San Francisco’s Economic Resiliency Plan, the city’s first-in-the-nation policy to prepare, mitigate and recover from the next recession.
According to a press release from the Mayor’s Office, San Francisco detailed information on potential recession scenarios and the various impacts they would have on the region. Mayor Farrell issued an Executive Order mandating that key city officials convene regularly to monitor potential signs of an economic recession. Staffers will develop targeted recovery plans specific to each potential recession scenario.
“We are enjoying unparalleled economic prosperity in our City, but we cannot forget the lessons learned from the Great Recession,” said Mayor Farrell. “There is not a question of if the next downturn will happen, but when. As Mayor, I have a duty to prepare our City and determine what steps we will need to take to recover. We will be poised to rebound and come back a better, stronger City.”
San Francisco could see a loss of over 54,000 jobs and the city’s unemployment rate could spike to 9.4 percent with a severe downturn in San Francisco’s technology sector, according to information collected from Economic Resiliency Plan consultants. A minor impact would impact the city with a loss of over 15,000 jobs, with an unemployment rate of 6.4 percent.
As part of his Executive Directive, Mayor Farrell instructed the City group, with help from the Office of Economic and Workforce Development and the Office of the Controller, to submit a list of concrete recession mitigation strategies for these scenarios by September 1.
In 2016, former SF Mayor Edwin M. Lee established the creation of San Francisco’s Economic Resiliency Plan, making San Francisco the first in the nation to embark upon such a strategy. Along with developing recession models, the plan identified a number of national, regional and local economic trends that could indicate a recession. Those include thresholds related to monthly gross receipts filings, personal income tax revenue, commercial vacancy rates, stock prices, monthly building permits and industrial production levels, among numerous other factors.
The City group will serve as the chief advisory body regarding recession mitigation efforts, providing insight on short and long-term recovery strategies. The group will consist of the City Controller, the City Economist, the City Administrator, the Mayor’s Budget Director and the Director of the Office of Economic and Workforce Development (OEWD). The group is expected to work with relevant city departments to establish specific recession mitigation and recovery strategies.
Between 2008 and 2010, the Great Recession caused the loss of 40,000 local jobs and severe cuts to city services. Since that decline, San Francisco added 189,000 jobs and lowered unemployment to 2.4 percent, compared to 9.4 percent at the height of the Recession.
The Economic Resiliency Plan is part of the city’s larger long term financial planning process, which aims to predict future economic conditions and identify fiscal strategies that can be used to balance the budget with minimal impact to city services during a recession.
As a result of its sound fiscal policy in recent years, San Francisco has strong financial standings. In March 2018, the credit rating agency Moody’s upgraded San Francisco’s General Obligation rating to Aaa, the highest rating in the system and the credit rating in San Francisco’s history. High credit ratings allow the region to issue debt at lower borrowing costs. In awarding the upgrade, Moody’s cited the City’s “demonstrated record of sustainable budgeting and financial management practices.”
Under the stewardship of former Mayor Lee, Mayor Farrell and the Board of Supervisors, San Francisco invested historic levels of funding in the City’s Economic Reserves, including rainy day reserves, now with a $449 million balance – nearly reaching the City’s goal of 10 percent of General Fund revenues in reserve.
“This directive is an important step forward as the City institutionalizes its monitoring of our economy and management of our finances to help protect against the next economic downturn,” said City Controller Ben Rosenfield.
“Despite our strong recovery, the pain of the Great Recession is still fresh for many San Franciscans,” said Todd Rufo, OEWD Director. “The City has a responsibility to ensure that when the next downturn hits, we are ready. The Economic Resiliency & Recovery Plan is a groundbreaking step towards protecting our financial future.”
Written By Casey Jacobs
