San Francisco Controller Warns of Significant Cuts Amid Historic Budget Deficit

At City Hall, where the Board of Supervisors Budget Committee will make the hardest fiscal decisions in San Francisco's modern history this spring, the arithmetic is unsparing: up to 50,500 residents stand to lose Medi-Cal coverage by the end of 2027, nearly 20,000 more could be cut from CalFresh food benefits, and a two-year deficit has ballooned to $936 million. City Controller Greg Wagner has warned that "significant" measures are needed to address what SPUR, the urban planning nonprofit, calls the largest expected deficit in the city's history.

The cumulative shortfall through fiscal year 2029-30 stands at $1.4 billion against an annual budget of approximately $16 billion. There is a sliver of better news: the Controller's Office reported in March 2026 that the projected gap appears on track to shrink by roughly $300 million. But Wagner cautioned that "as one-time solutions are depleted, the structural budget gap will become larger, making future budgets more difficult to close."

The primary driver is the Trump administration's federal funding reductions. President Trump signed the "One Big Beautiful Bill Act of 2025" on July 4, cutting Medicaid and SNAP funding while delivering $4.5 trillion in tax breaks. A joint report by the San Francisco Department of Public Health and the Human Services Agency found the law could drain up to $315 million per year from the city's budget by fiscal year 2027, with the Human Services Agency's budget alone facing a hit of up to $81 million.

The exposure runs far deeper than social services. San Francisco's share of federal Medi-Cal funding totals $2.1 billion, underpinning the city's entire safety net. The Controller's most recent forecast cut expected FEMA disaster reimbursements from $147 million to $80 million for fiscal year 2025-26. More than 100 active HUD housing grants in the city total roughly $326 million, all threatened by a proposed $33.5 billion cut to the Department of Housing and Urban Development. At least 10 public health programs, including HIV/AIDS services, face funding losses from a federal plan to reduce grants to Democratic-led states. HIV/AIDS activist Paul Aguilar has warned the cuts would have "dire effects" on San Francisco's model of care.

Add to that the San Francisco Municipal Transportation Agency, which faces a projected $322 million deficit of its own by July 2026.

Mayor Daniel Lurie, whose first budget eliminated approximately 1,400 city positions across 17 departments, ordered an additional $400 million in departmental cuts in December 2025. "We are facing an existential threat in terms of our budget," Lurie told the SF Standard in April 2025. "It could be $500 million. It could be a billion dollars more that comes at us in terms of cuts." He set aside a $400 million reserve in the current budget to cushion against federal losses, including a potential $141 million FEMA clawback.

The critical decision points now sit with Supervisor Connie Chan's Budget Committee. Chan has warned of a "fiscal cliff" and described "unprecedented attacks from the federal administration" threatening healthcare, food programs, and housing. San Francisco has joined roughly 28 local governments, including Santa Clara County and Oakland, in a federal lawsuit challenging the Trump administration's attempt to impose conditions on more than $350 million in disaster preparedness funding.

The mayor's budget for fiscal year 2026-27 must reach the Board of Supervisors by June, when the choice between deeper service cuts and new revenue sources can no longer be deferred.