San Francisco faces a $937 million budget deficit over the next two years. Salaries and benefits account for nearly half of the city’s expenditures, making workforce costs the largest driver of spending. Most of these costs are determined through negotiations with labor unions, the outcomes of which directly affect available funding for everything else the city does.
Police and fire contract negotiations will touch nearly $1 billion in annual spending this year — about 39% of the city’s discretionary budget. Decisions made this year will not only directly affect the size of the city’s deficit but also set a precedent for negotiations with other employees next year. A wage freeze might save $91 million but could complicate recruitment efforts, leading to increased overtime costs. A wage increase just 2% above inflation could add $58 million to the deficit, and if those increases were extended to all city employees next year, the deficit would grow by an additional $125 million.
Given the negotiations’ high stakes at a time when city departments have been asked to significantly reduce personnel spending, SPUR’s research illuminates a process that is both technically complex and deeply consequential. The goal is to help policymakers and residents understand labor negotiations and the trade-offs involved as the city balances competitive pay, fiscal sustainability, and service delivery.