San Francisco Budget Crisis Deepens, Potential Layoffs Warned by Mayor Lurie

Papier-mâché earth puppets loomed over the steps of San Francisco City Hall as city workers filled the lunch hour to protest possible cuts and layoffs, a scene LocalNewsMatters described as “hundreds” rallying Wednesday and SF Public Press estimating “roughly two hundred” protesters with supervisors, southeast community advocates and union leaders speaking from the steps.

Mayor Daniel Lurie has told departments to pare back city functions and focus on “core” services like public safety, clean streets and transit in a bid to shave about $400 million, Mission Local reported, and has directed agencies to reduce funded programs, stop new hiring, review contracts, cut administrative costs and lower interdepartmental charges by 10 percent.

The mayor’s office projects a worsening gap: Mission Local and SF Standard report an official projection of a $936 million deficit over the next two fiscal years if expenditures do not come down, a figure Mission Local says would grow to $1.2 billion by fiscal year 2029 to 2030; LocalNewsMatters used a less specific “over $800 million” phrasing. SF Standard also said Lurie has attributed part of the deterioration to federal legislation, named in reports as President Donald Trump’s One Big Beautiful Bill Act, which an updated mayor’s-office projection estimates could reduce city revenue by about $220 million.

Layoffs remain possible even though Lurie’s instructions did not explicitly say “layoffs,” SF Standard noted; Mission Local reported the mayor’s office is asking departments to assess downsizing impacts and “will work with [departments] to assess how downsizing will affect services.” The proposal echoes an earlier fight: SF Standard recalled Lurie’s initial budget plan to cut 1,000 jobs (about 90 percent vacant), which sparked union pushback and a June protest that produced arrests; after negotiations with Supervisor Connie Chan, the mayor ultimately cut about 40 filled positions.

Concrete program risks are already emerging. At a Budget and Appropriations hearing, Environment Department Director Tyrone Jue warned that unrestricted dollars support staffing and overhead beyond grant-funded programs, and SF Public Press reported department spokesperson Joseph Piasecki saying, “Today’s hearing reflects the difficult budget decisions facing the Environment Department and the programs we deliver citywide.” SF Public Press added that “under the current proposals eight positions are at risk,” with likely impacts to climate accountability, building electrification, and clean transportation delivery and potential constraints on the Climate Action Plan to reach net-zero greenhouse gas emissions by 2040.

The fiscal squeeze extends to schools: ABC7 reported on Feb. 19, 2026, that San Francisco Unified School District ended a citywide four-day teachers’ strike with a $183 million deal and will “tap into emergency reserves and pull out $111 million” to fund the settlement. ABC7 captured “smiles and hugs” as teachers and students returned and noted the district, which it said serves about 49,000 students, must notify educators of any potential layoffs by March 15, with conversations already under way, ABC7 reported.

A joint report from the mayor’s office, the controller’s office and the board’s budget and legislative analyst is expected to clarify assumptions and projections, SF Standard reported; until then, Mission Local warned the mayor’s requested cuts will “kick-start” a second consecutive year of difficult negotiations between the mayor’s office and dozens of city agencies as officials race to close the shortfall and determine which programs and positions survive the next budget cycle.