San Francisco’s dire budget deficit could soar to nearly $1 billion in 2026, Mayor Daniel Lurie said Thursday, an increase to an already historic shortfall that prompted city layoffs and nonprofit cuts this year.
“Last year was bad,” Lurie said during a discussion at Wired’s The Big Interview event at The Midway (opens in new tab). “This coming year is gonna be worse.”
Lurie attributed the shortfall in part to President Donald Trump’s One Big Beautiful Bill Act and its impact on the city’s healthcare budget. The Standard reported in November that Trump’s legislation could subtract $400 million from city coffers, and tens of thousands of San Franciscans are at risk of losing Medi-Cal coverage under the cuts.
“I’m focused on what I can control,” said Lurie. “And of course, if we can work with our federal and state officials who go to D.C. and help us, I will do that.”
Lurie inherited a challenging financial situation at City Hall when he took office in January, one that required balancing a roughly $780 million deficit via tough negotiations over the summer. The shortfall was caused by a confluence of factors, including increasing wages for City Hall workers, a high number of property tax reassessments, and a lack of one-time funding to plug the deficit. The city measures its deficits in two-year intervals.
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Lurie’s not-so-rosy estimate could foreshadow more cuts in 2026. This year’s budget deficit resulted in approximately 40 layoffs — a small slice of the city’s workforce — and a reduction of about $185 million in nonprofit contracts and spending. Lurie also instituted a hiring freeze at City Hall, although public safety jobs were exempted.
Details of next year’s budget challenges will become clearer in the coming weeks.
Lurie this month is expected to announce the mayor’s annual budget instructions, which provide guidance to departments on how much money the city has to work with and whether they need to make cuts. Last year, Mayor London Breed asked agencies to cut their budgets by 15%; some departments accomplished this, while others received an increase.
This year’s budget, which the Board of Supervisors and Lurie finalized in July, included increased appropriations to the police, sheriff, and district attorney, despite the fiscal shortfall. Those budget bumps came after Lurie, who was elected on a pro-law enforcement platform, promised to prioritize public safety during his 2024 mayoral campaign.
“I cannot control what’s happening in D.C.,” Lurie said. “I can’t control what’s happening in Sacramento. I can only make sure that we spend our dollars more effectively and efficiently.”