San Francisco’s financial picture looks a lot better than a did last fall—in part because of tax on high-end real estate transactions that Mayor Daniel Lurie and Sup. Bilal Mahmood want to repeal.
The General Fund shortfall, a new city report shows, is $168.5 million—and that’s $127.8 million than the last projection.
The long-term picture is still bleak, but improving: The deficit for the next two years is almost $300 million less that it was three months ago.
That’s because tax revenues are up across the board—and one bright spot is real-estate transfer taxes:
Both the prior December 2025 Report and this update project transfer tax revenue to reach approximately $400 million by FY 2029-30. However, after the historically weak years of FY 2022-23 and FY 2023-24, it was unclear if the recovery seen in FY 2024-25 was an outlier or the beginning of a sustained, quick recovery. Based on strong average price, transaction count, and total revenue figures through the first eight months of FY 2025-26, the City is more confident transfer taxes will bounce back from pre-FY 2022- 23 levels faster than anticipated in December.
In other words: Although Lurie and Mahmood are insisting that high transfer taxes are impeding new housing (which is completely and demonstrably false), the market for luxury real-estate seems to be doing just fine. High-end sales of mansions and office buildings are generating large amounts of money that the voters intended be used for affordable housing.
The People’s Budget Coalition notes that
This is now a pattern, not a surprise. Every major budget update consistently shows the outlook improving as investments in our neighborhoods and our safety net continues to spur our economic recovery.
At the same time, Lurie is talking about massive cuts to social services, just about everything except the cops.
He also wants to repeal Prop. I, which raised taxes on real estate deals worth more than $10 million. From the coalition:
“At the exact moment this revenue source is recovering and proving its strength, the Mayor is proposing to weaken it,” said Kyle Smeallie, Policy Director of the San Francisco Community Land Trust. “We cannot afford to lose this critical funding source; it is incoherent and fiscally irresponsible to propose tax cuts on the wealthiest real estate developers in a financial moment like this.”
If the voters approve Prop. D, the overpaid CEO tax on the June ballot, the city will get another $300 million a year—more than enough to cover the annual General Fund deficit.
And yet, Lurie and his allies are opposing it.
The General Fund—the money the mayor and the supes control—is about $6.5 billion. The current deficit is about 2 percent of that. Controlling police overtime could cut it in half.
That doesn’t seem like grounds to take a chainsaw to the city’s historic social safety network.
