Relocations And Remote Work Hit San Francisco’s Finances
San Francisco’s budget has been hit hard by the pandemic restrictions that have many people working remotely, with some moving to other places with lower costs of living.
“As we respond to the urgent challenges of the COVID-19 pandemic and look forward to our economic recovery, we can’t lose sight of our long-term financial situation,” said San Francisco Mayor London Breed in a press release. “While we’re hopeful the economic consequences of COVID-19 will become less severe as the vaccine rollout continues and we reopen once again, we still need to make tough choices now to ensure we’re able to provide the services that our residents depend on.”
The New York Times reported that remote work has meant many San Franciscans have fled the Bay area. In fact, residential rents in San Francisco have fallen by 27 percent from a year ago, and the office vacancy rate has risen to 16.7 percent.
At the same time, sales tax receipts in the downtown’s retail, hotel and business districts fell more than 70 percent in the second quarter last year compared with the same period in 2019, Bloomberg reported. Unlike many communities, San Francisco has not seen an increase in online sales tax.
That indicates the big impact that people leaving town — at least for now — is having on the city budget. One major question: How many will come back when the pandemic crisis is over?
San Francisco officials expect to see budget shortfalls reaching $503 million in five years if the trend continues.
Bloomberg reported that the city’s fiscal analysts foresee that San Francisco will get hit with a $411 million shortfall in the next fiscal year. At the same time, officials have mostly spent San Francisco’s one-time sources to close the previous two-year budget gap of $1.5 billion, the city said.
Only time will tell how many migrants decide to take root and become permanent residents somewhere else than California, but the early statistics suggest that the number could be substantial.