San Francisco County Municipal Code Art. IX Financial Provisions

Sec. 9.100. Budget Process Ordinances. Sec. 9.101. Proposed Biennial and Multi-Year Budgets. Sec. 9.102. Controller's Opinion on Revenue Estimates. Sec. 9.103. Adoption of Appropriation Ordinances. Sec. 9.104. Veto of Appropriations. Sec. 9.105. Modifications. Sec. 9.106. General Obligation Bonds. Sec. 9.107. Revenue Bonds. Sec. 9.108. Lease Financing. Sec. 9.109. Refunding Bonds. Sec. 9.110. Bond Election by Initiative. Sec. 9.111. General Authority. Sec. 9.112. Revenue Bonds of the Port Commission. Sec. 9.113. General Fiscal Provisions. Sec. 9.113.5. Rainy Day Reserves. Sec. 9.114. Mission-Driven Budget. Sec. 9.115. Departmental Budget Commitments. Sec. 9.116. Departmental Savings and Revenue Gains. Sec. 9.117. Establishment of Audit Committee of the Board of Supervisors. Sec. 9.118. Contract and Lease Limitations.

Sec. 9.119. Five-Year Financial Plan. Sec. 9.120. Financial Policies.

(a) The fiscal year for the City and County shall commence on the first day of July of each year and shall end on the last day of June of the next succeeding year. The City's budgetary cycle shall be a rolling two-year cycle. Each year the City shall adopt a new biennial budget that projects revenues and expenditures for the next two fiscal years. The budgetary cycle shall commence on the first day of July of each year and shall end on the last day of June twenty-four months later. (b) On or before June 30 of each year, beginning on July 1, 2010 with respect to those non-general fund departments proposed by the Mayor and designated by the Board by ordinance for early implementation, and beginning on July 1, 2012 as to all other City departments, the Board of Supervisors shall, except for equipment and capital improvements, enact an interim biennial appropriation ordinance and not earlier than the 15th day of July, nor later than the first of August of each year, the Board of Supervisors shall adopt the proposed biennial budget as submitted or amended and shall adopt the biennial appropriation ordinance accordingly, which shall supersede the interim appropriation ordinance. (c) The Mayor shall submit and the Board of Supervisors shall act on ordinances with respect to the following: 1. A schedule and procedures for the orderly preparation and submission of the biennial proposed budget and for the review and adoption of the necessary interim and final appropriations ordinances; 2. A description of the form of the proposed biennial budget and appropriation ordinance consistent with the financial records required by Section 3.105 of this Charter and containing information relating the type and extent of services to be delivered or revenues to be generated to proposed expenditures in a manner which, to the extent feasible, allows comparison of revenue trends as well as expected performance and expenditures between various fiscal years; 3. A procedure to include public participation in the budgetary process which shall include public hearings conducted by the com- missions, Mayor and the Board of Supervisors; and 4. The form, content and dates of submission of the City's Capital Improvements and Facilities Maintenance Budgets. The ordinance relating to Capital Improvement and Facilities Maintenance shall minimally: (A) Require that such budgets be prepared for more than a single year; (B) Clearly establish distinctions between major, long term construction, replacement and acquisition projects (Capital Improvements) and short term repair, minor replacement and maintenance projects (Facilities Maintenance); (C) Be consistent as to the date of submission with the time requirements established for the submission of the budget and appropriation ordinance; and (D) Provide information regarding the estimated completion schedule for Capital Improvements, the funding source for each and the estimated annual operating costs thereof. (Amended by Proposition A, Approved 11/5/2009)

BUDGETS. (a) The Mayor shall submit to the Board of Supervisors each year a proposed biennial budget, ordinances and resolutions fixing wages and benefits for all classifications and related appropriation ordinances. (b) The proposed biennial budget shall include: 1. Estimated revenues and surpluses from whatever sources, to the extent feasible, for the forthcoming two fiscal years and the allocation of such revenues and surpluses to various departments, functions and programs to support expenditures. Proposed expenditures may include such necessary and prudent reserves as recommended by the Controller; and 2. A summary of the proposed biennial budget with a narrative description of priorities, services to be provided and economic assumptions used in preparing the revenue estimates. (c) The proposed biennial budget and appropriation ordinances shall be balanced for each fiscal year so that the proposed annual expenditures of each fund do not exceed the estimated annual revenues and surpluses of that fund. If the proposed budget contains new

revenue or fees, the Mayor shall submit to the Board of Supervisors the relevant implementing ordinances at the same time the biennial budget is submitted. (d) Until the appropriation ordinances are adopted by the Board of Supervisors, the Mayor may submit to the Board of Supervisors revisions to the proposed biennial budget, appropriation ordinances, and ordinances and resolutions fixing wages and benefits. The Mayor may instruct the Controller to prepare the draft appropriation ordinances. (e) The Mayor shall file a copy of the proposed biennial budget at the Main Library and shall give notice of the budget summary, including making copies available to the public. Upon final approval of the budget by both the Board and the Mayor, notice shall be given of the final budget summary. (f) The Board of Supervisors by ordinance may require multi-year budget plans and other budget planning strategies to be performed by the several departments and offices of the City and County. (g) No later than February 1 of any even-numbered fiscal year, the Mayor and the Board of Supervisors by resolution may determine that the upcoming budgetary cycle or cycles for some or all City departments and offices shall be a fixed budgetary cycle or cycles in which the biennial budget will remain in effect for two fiscal years. With respect to the designated City departments and offices, the Board will not adopt a new budget for the second fiscal year of such fixed budgetary cycle or cycles, except as provided in subsection (h), below. But the City shall adjust the biennial budget for the second year of any fixed budget cycle if certain conditions exist, using the following process: 1. If, during the first year of any fixed budgetary cycle, the Controller projects that the City will experience significant increases or decreases in revenues or expenditures during the second year of such budgetary cycle, the Controller shall submit a report to the Mayor and the Board of Supervisors identifying those increases or decreases. 2. The Mayor shall prepare and submit to the Board of Supervisors a proposed amendment to the biennial budget responding to the Controller's report. The Board may approve or amend the Mayor's proposed budget amendment subject to the limitations that apply to the approval of the budget in Section 9.103. The Mayor's proposed budget amendment shall be deemed approved by operation of law unless the Board finally adopts an amendment to the biennial budget on second reading no later than July 15. 3. The Board's resolution declaring that an upcoming budgetary cycle or cycles shall be fixed, shall include a definition of the term " significant increases or decreases in revenues or expenditures," a deadline for the Controller's submission of a report identifying such increases or decreases, and a deadline for the Mayor to submit to the Board a proposed amendment to the biennial budget in response to the Controller's report. (h) Nothing in this section shall limit the ability of the Mayor or a member of the Board of Supervisors to introduce at his or her discretion an amendment to a biennial budget at any time during the budgetary cycle. (Amended by Proposition A, Approved 11/5/2009)

ESTIMATES. The Mayor shall submit to the Controller for review the estimated revenues contained in the proposed biennial budget and any subsequent revisions. The Controller shall then provide the Board of Supervisors with an opinion regarding the accuracy of economic assumptions underlying the revenue estimates and the reasonableness of such estimates and revisions. (Amended by Proposition A, Approved 11/5/2009)

ORDINANCES. The Board of Supervisors may amend the proposed biennial budget and appropriation ordinances as follows:

1. After review of the Controller's analysis of the Mayor's revenue estimates, the Board of Supervisors may reduce estimated revenues;
2. The Board of Supervisors may increase or decrease any proposed expenditure in the General Fund or any special, sequestered or other fund so long as the aggregate changes do not cause the expenditures from each fund to exceed the amount proposed for expenditures by the Mayor from any such fund; and
3. The Board of Supervisors may increase or decrease any proposed expenditure for Capital Improvements.

(Amended by Proposition A, Approved 11/5/2009)

The Mayor may reduce or reject any expenditure authorized by the Board of Supervisors, except appropriations for bond interest, redemption or other fixed charges, within ten days after the adoption of a final biennial or supplemental appropriations ordinance. Within ten days of receipt of the Mayor's veto message, the Board of Supervisors may reinstate, in whole or in part, any expenditure reduced or rejected by the Mayor by a vote of two-thirds of its members. In overriding any Mayoral veto, the Board of Supervisors shall not cause the aggregate expenditures for the General Fund or any special, sequestered or other fund in the appropriation ordinances to exceed the Mayor's revenue estimate as allocated to such funds. (Amended by Proposition A, Approved 11/5/2009)

The Board of Supervisors may authorize the Controller, upon the request of the Mayor, other officials, boards or commissions of the City and County to transfer previously appropriated amounts within the same fund within the same governmental unit without approval of the Board of Supervisors. Amendments to the appropriations ordinance, as finally adopted, may be initiated by the Mayor or a member of the Board of Supervisors and adopted in the same manner as other ordinances. No amendment to the appropriations ordinance may be adopted unless the Controller certifies availability of funds. Any appropriation contained in an emergency ordinance shall be deemed to be an amendment to the final appropriations ordinance.

The Board of Supervisors is hereby authorized to provide for the issuance of general obligation bonds in accordance with the Constitution of the State of California. General obligation bonds may be issued and sold in accordance with state law or any local procedure adopted by ordinance. There shall be a limit on outstanding general obligation bond indebtedness of three percent of the assessed value of all taxable real and personal property, located within the City and County.

The Board of Supervisors is hereby authorized to provide for the issuance of revenue bonds. Revenue bonds shall be issued only with the assent of a majority of the voters upon any proposition for the issuance of revenue bonds, except that no voter approval shall be required with respect to revenue bonds:

1. Approved by three-fourths of all the Board of Supervisors if the bonds are to finance buildings, fixtures or equipment which are deemed necessary by the Board of Supervisors to comply with an order of a duly constituted state or federal authority having jurisdiction over the subject matter;

2. Approved by the Board of Supervisors prior to January 1, 1977;

3. Approved by the Board of Supervisors if the bonds are to establish a fund for the purpose of financing or refinancing for acquisition, construction or rehabilitation of housing in the City and County;

4. Authorized and issued by the Port Commission for any Port-related purpose and secured solely by Port revenues, or authorized and issued for any Airport-related purpose and secured solely by Airport revenues;

5. Issued for the proposes of assisting private parties and not-for-profit entities in the financing and refinancing of the acquisition, construction, reconstruction or equipping of any improvement for industrial, manufacturing, research and development, commercial and energy uses or other facilities and activities incidental thereto, provided the bonds are not secured or payable from any monies of the City and County or its commissions.

6. Issued for the purpose of the reconstruction or replacement of existing water facilities or electric power facilities or combinations of water and electric power facilities under the jurisdiction of the Public Utilities Commission, when authorized by resolution adopted by a three-fourths affirmative vote of all members of the Board of Supervisors.

7. Approved and authorized by the Board of Supervisors and secured solely by an assessment imposed by the City.

8. Issued to finance or refinance the acquisition, construction, installation, equipping, improvement or rehabilitation of equipment or facilities for renewable energy and energy conservation. Except as expressly provided in this Charter, all revenue bonds may be issued and sold in accordance with state law or any procedure provided for by ordinance. (Amended November 2001)

The City and County may enter into lease financing agreements only with the assent of the majority of the voters voting upon any proposition for the authorization of the lease financing. As used in this section, lease financing shall mean any lease or sublease made between the City and County and any public agency or authority, a non-profit corporation or a retirement system for the purpose of financing the acquisition, construction or improvement by the City and County of real property or equipment. The requirements of this section do not apply to:

1. Any lease financing which was approved in fact or in principle by a resolution or ordinance adopted by the Board of Supervisors prior to April 1, 1977; provided, that if the resolution or ordinance approved the lease financing only in principle, the resolution or ordinance must describe in general terms the public improvements or equipment to be financed; or
2. The amendment or the refunding of a lease financing which is expected to result in net savings in rental payments to the City and County on a present value basis, calculated as provided by ordinance; or
3. Lease financing involving a nonprofit corporation established for the purpose of this subsection for the acquisition of equipment, the obligations or evidence of indebtedness with respect to which shall not exceed in the aggregate at any point in time a principal amount of $20 million, such amount to be increased by five percent each fiscal year commencing with fiscal year 1990-1991; provided, however, that prior to each sale of such obligations or evidence of indebtedness, the Controller certifies that in his or her opinion the net interest cost to the City will be lower than other financings involving a lease or leases.

The Board of Supervisors is hereby authorized to provide for the issuance of bonds of the City and County for the purpose of refunding any general obligation or revenue bonds of the City and County then outstanding. No voter approval shall be required for the authorization, issuance and sale of refunding bonds, which are expected to result in net debt service savings to the City and County on a present value basis, calculated as provided by ordinance.

Proceedings for the authorization and issuance of bonds for the acquisition, construction or completion of any public utility or utilities may be initiated by electors in the following manner: Whenever a petition, signed by qualified electors of the City and County equal in number to at least fifteen percent of the votes cast for all candidates for Mayor at the last proceeding general municipal election for Mayor, requesting the Board of Supervisors to submit to the voters of the City and County a proposition or propositions for incurring bonded indebtedness for the acquisition, construction or completion of any public utility or utilities shall be filed with the director of elections, the Board of Supervisors shall submit to the voters the proposition or propositions for incurring bonded indebtedness of the City and County for purpose or purposes set forth in that petition at the next general municipal, statewide or special municipal election.

COMMISSION. The Port Commission shall have the exclusive power to perform or accomplish issuance of revenue bonds for Port-related purposes, as provided in Section B7.305 of this Charter.

Each departmental budget shall describe each proposed activity of that department and the cost of that activity. In addition, each department shall provide the Mayor and the Board of Supervisors with the following details regarding its budget:

1. The overall mission and goals of the department;
2. The specific programs and activities conducted by the department to accomplish its mission and goals;
3. The customer(s) or client(s) served by the department;
4. The service outcome desired by the customer(s) or client(s) of the department's programs and activities;
5. Strategic plans that guide each program or activity;
6. Productivity goals that measure progress toward strategic plans;
7. The total cost of carrying out each program or activity; and
8. The extent to which the department achieved, exceeded or failed to meet its missions, goals, productivity objectives, service objectives, strategic plans and spending constraints identified in subsections (1) through (6) during the prior year or prior budgetary cycle. Departmental budget estimates shall be prepared in such form as the Controller, after consulting with the Mayor, directs in writing. (Amended by Proposition A, Approved 11/5/2009)

It shall be the duty of each officer, department head, board or commission ultimately responsible for the management of each department to certify to the Mayor and the Board of Supervisors his/her commitment to perform the programs and activities with specified levels of performance for specified costs as outlined in the budget description and other information required by Section 9.114.

GAINS. Within 30 days of the Controller's issuance of the combined annual financial report of the City and County, the Controller shall report to the Mayor and Board of Supervisors regarding the extent to which each department in the prior fiscal year has recovered additional revenues measured by the difference between projected and experienced revenues. It shall be City policy for the Mayor and Board of Supervisors, upon receipt of this report, through the supplemental appropriations process to give serious consideration to rewarding those departments that the Controller has certified pursuant to this section exceeded their revenue goals or met or exceeded departmental operational goals expending less than has been projected in the budget.

OF THE BOARD OF SUPERVISORS. On or before the operative date of this Charter and until this requirement is changed by the Board of Supervisors, the Board of Supervisors shall establish through its rules an Audit Committee. The Audit Committee shall:

1. Maintain a direct and separate line of communication between the Board of Supervisors and the City and County's independent auditor;
2. Meet with the independent auditor to review the audited annual financial statement and the auditor's report on such matters as the quality and depth of management and compliance;
3. Recommend appropriate action to be taken by the Board of Supervisors to implement recommendations contained in the audit report;
4. Follow up, as necessary, to ensure that approved recommendations are promptly implemented; and
5. Perform other duties as assigned by the Board of Supervisors.

(a) Unless otherwise provided for in this Charter, contracts entered into by a department, board or commission having anticipated revenue to the City and County of one million dollars or more, or the modification, amendment or termination of any contract which when entered into had anticipated revenue of one million dollars or more, shall be subject to approval of the Board of Supervisors by resolution. (b) Unless otherwise provided for in this Charter, and with the exception of construction contracts entered into by the City and County, any other contracts or agreements entered into by a department, board or commission having a term in excess of ten years, or requiring anticipated expenditures by the City and County of ten million dollars, or the modification or amendments to such contract or agreement having an impact of more than $500,000 shall be subject to approval of the Board of Supervisors by resolution. (c) Unless otherwise provided for in this Charter, any lease of real property for a period of ten or more years, including options to renew, or having anticipated revenue to the City and County of one million dollars or more; the modification, amendment or termination of any lease, which when entered into was for a period of ten or more years, including options to renew, or had anticipated revenue to the City and County of one million dollars or more; and any sale or other transfer of real property owned by the City and County, shall first be approved by resolution of the Board of Supervisors. Leases of property under the jurisdiction of the Port Commission for maritime use shall be exempt from the requirements of this section. (Amended November 1997)

(a) No later than July 1, 2010, the City shall adopt a five-year financial plan for those non-general fund departments and offices proposed by the Mayor and designated by the Board by ordinance for early implementation. The City shall update that plan and combine

it with a five-year financial plan for all other City departments and offices no later than July 1, 2011. By March 1st of each odd numbered year thereafter, the Mayor shall propose a five-year financial plan, and by May 1st of each such year the Board of Supervisors shall review, amend and adopt the five-year financial plan by resolution. (b) The Mayor and the Board of Supervisors shall use the financial plan as a tool to plan for upcoming City budgets. The financial plan shall include a forecast of expenditures and revenues during the five-year period, and actions proposed to balance revenues and expenditures during each year of the plan. The plan shall include a summary of each department's strategic goals, resources allocated in the plan to meet these goals, and changes in service levels expected given investment levels proposed in the plan. (Added by Proposition A, Approved 11/5/2009)

(a) The Controller shall propose, and the City shall adopt, long-range financial policies that are consistent with generally recognized principles of public finance. The policies shall address, at a minimum, the following issues: 1. Creation and maintenance of adequate reserves; 2. Use of volatile revenues; 3. Issuance of debt; and 4. Institution of extraordinary financial and budgetary measures to facilitate the City's recovery from earthquake, fire, flood, or other physical calamity. The City may not adopt a budget that the Controller determines is inconsistent with one or more of these policies. (b) The Controller shall recommend an initial set of financial policies to the Mayor no later than March 1, 2010, and may recommend additional financial policies or amendments to existing policies no later than October 1 of any subsequent year. Within 60 days of such recommendation, the Mayor and the Board of Supervisors shall consider the recommended policies. The City shall adopt individual financial policies only upon the approval of both the Mayor and the Board of Supervisors by a two-thirds' vote. The adopted policies shall be framed as ordinances that shall be codified in the Administrative Code and identified as financial policies adopted under this Section. (c) Upon a two-thirds' vote, the Board of Supervisors by resolution may suspend, in whole or in part, any ordinance containing these policies for the succeeding fiscal year. (Added by Proposition A, Approved 11/5/2009)