S.F. to budget 400M in reserve in anticipation of federal cuts

San Francisco plans to create a $400 million reserve fund to counteract potential federal budget cuts, as revealed by Mayor Daniel Lurie. This fund will be sourced from existing reserve accounts, specifically reallocating unused dollars from the Healthcare Security Ordinance. The initiative responds to fears of significant cuts to Medicaid proposed by Congressional Republicans, which could worsen the city’s existing $782 million structural deficit. Lurie stressed the importance of proactive planning to navigate the financial challenges ahead. The reserve fund, while significant, only offers partial protection against the $2 billion in federal funding that constitutes about 13 percent of the city’s overall budget.

Approximately half of that federal funding is tied to state reimbursements for Medicaid. The Mayor will have discretion over the fund, but expenditures will require approval from the Board of Supervisors. Lurie is set to announce the budget proposal by June 1, underscoring the urgency of solidifying the city’s financial footing.