It’s amazing what you learn about Gavin Newsom’s budget – after the Budget & Finance Committee starts to hold hearings.  While the Mayor’s public summary released on June 1st implied that Newsom planned to downsize 8% of his own staff, what he actually did was farm out positions and funds to other departments.  We also learned this week that the first things to go in the Mayor’s Office during mid-year cuts last year was (a) money for violence prevention programs, and (b) add-backs by the Supervisors.  Meanwhile, Newsom spends $473,122 to pay the salaries of five press secretaries – more than what he spends on seven liaisons for the Mayor’s Office of Neighborhood Services (MONS).  The City has a Department of the Environment with its own Executive Director and 58 staff – but the Mayor’s Office has a Greening Director who makes $105,742, along with a Director of Climate Control.  Newsom is opposing Budget Analyst Harvey Rose’s recommendation to cut down his press operation, and even said Tuesday he might veto the Interim Budget (which the Supervisors amended to shift funds away from Police and Fire, and to Health and Human Services.)  If he pursues the latter, the City could be unable to spend money after July 1st – a government shutdown that would doom Newsom’s statewide ambitions.

Newsom announced on June 1st that his budget cut 28% of the Mayor’s Office, a claim that was quickly debunked after Beyond Chron read the 430-page summary.  His proposal would increase the Mayor’s Office budget by 60%, although Newsom’s Budget Director has clarified that most of that money comes from affordable housing funds from the federal stimulus.  If you look at the level of staff, there has indeed been shrinkage – albeit only by 8 percent.

Yesterday, the Board of Supervisors’ Budget Committee began the task of reviewing each agency’s budget – with presentations by Department heads, and recommendations by Budget Analyst Harvey Rose.  When you fine-tune numbers beyond what was only a summary, a more accurate picture starts to appear.  The Mayor’s Office budget has little to do with responding to a fiscal crisis where we “share the pain,” and more to do with preparing Newsom’s run for Governor.

First, let’s talk about the actual size of the budget.  It’s true that the Mayor’s Office will have 8% fewer employees (a net loss of five positions), and there has been a $15 million influx in new federal funds to the Mayor’s Office of Housing.  But what’s also true is that twenty positions are being reassigned out of the Mayor’s Office – twelve to the Office of Economic and Workforce Development, and eight to Department of Children Youth and Families.  These duties being transferred comes a natural $8 million cut to the Mayor’s Office – much of it in grant funds.  On balance, the Office isn’t being cut it all.

In December, Newsom announced that the City was in a financial crisis – and so  mid-year cuts were inevitable.  What did he cut out of the Mayor’s Office?  Eighty-one percent of the $650,000 cut was grants to non-profit organizations (including violence prevention money), even though the category of “assistance and grants” is less than half of his department’s budget.  “Add-backs” from the Board of Supervisors (i.e., programs the Mayor had cut that the legislative branch restored during budget season) were also targeted – such as $65,000 for Filipino employment services in the Excelsior.

So what did he not cut?  Who are the sacred cows in the Mayor’s Office?

It’s been a joke for years that Gavin Newsom governs by press release.  But now that he’s running for Governor, his City-funded media operation has become obscene.  Director of Communications Nathan Ballard makes $141,700 a year, while his deputy Brian Purchia gets $105,742.  The Mayor has three additional press people – one for Latino media and one for Asian media (who each get paid $80,626), along with a Communications Officer who makes $64,428.  Budget Analyst Harvey Rose has recommended that the last three positions be cut – as well as two unfilled press positions.  Newsom has opposed this suggestion.

It goes to show Newsom’s priorities – when he collectively pays his five-person press team more than seven liaisons at the Mayor’s Office of Neighborhood Services.  If San Francisco taxpayers are asked to pay for Newsom’s political hacks, at least give them something useful to do – such as answer constituent complaints, direct citizens through the City’s bureaucratic maze and attend community meetings.  Despite Randy Shaw’s critical opinion of MONS as obsolete (now that the City has a much vaunted 311 Center), their job is to actually serve the people of San Francisco – rather than manipulate the media.

Despite the bad press that Newsom got when he stole funds from Muni to pay Wade Crowfoot’s six-figure salary, both the Mayor’s Greening Director and his Director of Climate Control are still gainfully employed in a deep recession.  What’s truly odd is that the City also spends $11 million to fund a Department of the Environment – complete with its own Executive Director (who the Mayor appoints), and a citizen Commission.  And why does the Mayor have an Education Policy Director on payroll at $122,403 a year – when we also have a Superintendent of Schools, and a Department of Children Youth and Families?

Harvey Rose has provided a list of recommended cuts to the Mayor’s Office that would save about $1 million.  Newsom has only agreed with a tiny handful, such as eliminating one of the vacant positions at MONS.  The Supervisors may have to cut the rest.

Will the Mayor Keep Fighting the Board?

After dueling rallies showcased the City’s competing priorities this week, the Board of Supervisors voted 7-3 to amend the Mayor’s Interim Budget.  Blasting Newsom’s proposal as unfairly placing cuts on public health and human services, the Board took $82 million out of Police, Fire and Sheriff so that all departments “share the pain.”  The Interim Budget is just a placeholder document – so that the City can pay its bills after July 1st, while the Supervisors and Mayor put final touches on the 2009-2010 budget.  But the symbolic message was effective, and will shape the rest of the budget conversation.

The Mayor could veto the Interim Budget, but the practical effect would be that the City government shuts down in July.  Which would be incredibly stupid for Newsom to do.  Like House Speaker Newt Gingrich was blamed in 1995 for causing the federal government shutdown, such a move would be viewed as petty and vindictive – while sacrificing public services in a recession.  It would be a distraction from Newsom’s race for Governor, and damage his career.  The Mayor, however, did tell a Channel 7 reporter on Tuesday he might do it, and is consulting attorneys about the consequences.

Newsom is angry that the Board effectively forced his hand in the budget process, but in a way he is getting his comeuppance.  Back in 2007, after a veto-proof majority of Supervisors appropriated $33 million for affordable housing, Newsom did not sign or veto it – instead choosing to simply not spend the money.  This was apparently legal, because the Supervisors cannot force the Mayor to spend money. All they can do is force him to not spend money (through a de-appropriation.)  In other words, Newsom outmaneuvered the legislative branch on a technicality.  But now, they have done the same.

This piece was first published in Beyond Chron.

(This is officially becoming a trend.  Read to the bottom for Newsom’s wrongheaded assessment of the May 19 special election. – promoted by David Dayen)

Mayor Gavin Newsom must assume that when releasing a budget everyone expects to have cuts, the press will just take a few pictures, jot down some snappy quotes, and – maybe – read his one-page press release.  Beyond Chron, however, bothered to review the whole proposal, and the numbers contradict what Newsom said in his speech – where he assured us Public Health cuts would be less severe than feared.  The budget has over $100 million in cuts for that Department, not $43 million as he claimed.  Newsom also said the Mayor’s Office would get a 28% cut, but the figures show only 9% of his staff are being laid off – and the division that runs his media operation would actually get bigger.  And in a strange twist, Newsom said he really didn’t like some cuts that he proposed – and would “count on” the Supervisors to restore them during the add-back process, but left unsaid where to find the money.  As San Francisco faces its worst fiscal crisis since the Great Depression, Newsom bragged that Police and Fire are getting no layoffs – while the rich and Downtown businesses will not be paying more taxes.  He also warned more budget cuts are coming from the state, echoing the threats of Governor Schwarzenegger.

June 1st is when the Mayor has to submit a budget, and over the next month the Board of Supervisors’ Budget Committee will scrutinize his proposal, and offer some amendments before final passage in July.  Newsom took the unilateral step of making $71 million in mid-year cuts earlier this year without approval of the legislative branch, and the question now is how the Board will handle another onslaught of painful decisions – in a way that most fairly “shares the pain” to protect the most vulnerable.  But first, Gavin needed his orchestrated press event.

I’ve attended my share of press conferences in Room 200 – but yesterday’s one appeared calculated to keep most local media at bay.  Rather than have Mayor Newsom speak in the reception area, we were ushered into a back room.  Then, we were told we could not go inside – but could watch from behind a doorway, as elected officials and department heads crowded in to take their seats.  Before the event started, the staff asked homeless rights advocate Jennifer Friedenbach to leave because she was not “credentialed press” – although she was there to cover the event for Street Sheet.  Later on, the only courtesy that Newsom’s staff gave us was for each reporter to briefly step into the room (one at a time) to take photos of the Mayor giving his speech.

Newsom spoke for about an hour, outlining his budget proposal and how he “looked forward” to working with the Supervisors over the next month.  Despite the City facing a half-a-billion dollar deficit, Newsom said he had a “balanced budget with no taxes and no borrowing” which “doesn’t come close” to balancing it on the backs of Public Health (DPH) or Human Services (HSA).  The Mayor had asked all Department Heads to make 12.5% in cuts, but these agencies that serve the poorest were spared from such an extent – adding, he said, that HSA only had $27 million in cuts, and DPH only about $43 million.

It wasn’t until reading the 430-page document that I learned this was at best misleading, and at worst a lie.  You can probably get $43 million in Public Health by just counting the cuts to various contract services like substance abuse, mental health, Health At Home, community health, ambulatory care and emergency services.  But that still doesn’t count the $100 million in net budget cuts to S.F. General Hospital and Laguna Honda.  Newsom also claimed the City will be getting $80 million in federal stimulus funds to help with Medi-Cal reimbursements.  Turns out the actual figure is $37 million.

Newsom acknowledged that “layoffs are in the budget,” and 1,603 positions would have to be eliminated.  The Mayor added that he cut 28% out of his own budget, which he used to point out that everyone was asked to tighten their belts.  But the budget proposal shows that the Mayor’s Office would get a 60% increase, although much of that includes various funds and services.  Just looking at what percentage of staff would be laid off in that department, it’s only 9% – or less than the 12% target Newsom gave to all other agencies.  The Mayor’s Office of Public Policy & Finance (which includes his bloated media relations division) will actually get 29% more than this year under his proposal.

In a bizarre (almost Orwellian) moment, Newsom lamented some of his cuts – and said he hoped the Board of Supervisors would reverse them.  Specifically, he mentioned the mental health and substance abuse cuts in the Health Department budget.  “I’m counting on [the Board] to add back the things I don’t want cut,” he said.  But the Mayor’s budget proposal is supposed to be just that – his proposal – and the political fight then happens as the Supervisors debate his funding priorities, and vote to make any changes.

I asked Newsom why propose these cuts in the first place if he wants them reversed, and he replied “because I have to submit a balanced budget.”  I pointed out the Supervisors also must pass a balanced budget, and he replied they could use the “add-back” process.  But “add-backs” are only possible if there’s money, which is no guarantee in this year’s fiscal crisis.  Newsom said that the Board’s Budget Analyst Harvey Rose would figure it out later, like he does “every year” – even though this is no ordinary year.

One group the Mayor bragged won’t see layoffs is the Police, despite the controversy about them taking millions from Muni in “work orders” to patrol buses.  Now, a Channel 7 investigative report shows the cops aren’t doing what they’re getting paid for in that program.  The Supervisors may have pried $5 million from Police to give back to the MTA, but the Mayor’s Police budget still has a $14 million line item for work orders.  Newsom adds the Fire Department won’t have cuts, while the Firefighters Union pays his consultant – Eric Jaye – to run the campaign against “rolling brownouts” that would save money.

The Mayor concluded his remarks by discussing what could make our budget worse: the unresolved fiscal crisis in Sacramento.  Governor Schwarzenegger’s May revise proposed borrowing money from city and county governments to help the state’s financial situation, which could blow another $175 million hole in the City’s deficit.  Newsom called it a “done deal” in his speech, but I got him to acknowledge (after the speech) that two-thirds of the state legislature must still approve it – before Arnold has carte blanche to raid California’s broke localities.

Newsom also addressed the state’s recent special election, and said the “message was clear – the people want us to find $6 billion in more cuts.”  That’s a disturbing analysis, as polling evidence shows that the voters did not vote “for cuts” when they rejected a fatally flawed budget package that was the product of political extortion.  The state budget can also be balanced with deeply popular revenue measures – such as an oil severance tax, or restoring upper-income tax brackets to what Republican Governors Pete Wilson and Ronald Reagan agreed to during hard times.  We need to fight for this.

Gavin Newsom wants to be Governor, but his analysis of the state budget mess is the last thing progressives need right now – and calls into question whether he’s ready for prime time.  As Schwarzenegger pushes for an “all-cuts” budget, we need Democrats in Sacramento who fight back – and help build momentum and public outrage against the two-thirds rule.  Newsom supports lowering the threshold to pass a state budget, but he has not shown the willingness to lead on this issue.  For now, progressives should be looking elsewhere …

Paul Hogarth is the Managing Editor of BeyondChron, San Francisco’s Alternative Online Daily, where this piece was first published.