More and more, San Francisco’s 2026 budget process is resembling a slasher flick.
Shadows are dancing across City Hall’s marble-wrought grand staircase, with President Donald Trump threatening to leap into view, ready to gouge hundreds of millions from the city’s coffers.
The threat is real: Roughly $2 billion of San Francisco’s $16 billion budget flows from Washington, funding hundreds of grant programs across nearly every city department. Trump has already started turning off the tap. With a $643 million deficit looming, Mayor Daniel Lurie has days to reveal how the city absorbs the pain — and who feels it most.
Trump has already made real cuts to healthcare. And while San Francisco has fought back — filing more than a dozen lawsuits against the administration and winning most of them so far — a single appellate loss could imperil billions. Fear that Trump may further upend any number of federal revenue streams undergirds every hard fiscal choice in front of Lurie.
On June 1, the mayor will propose his draft budget to the Board of Supervisors and voters, revealing the true extent of the bloodletting.
Trump’s policy choices are projected to disenroll up to 45,000 San Franciscans from healthcare and tens of thousands from food stamps. To protect those programs, Lurie is trimming across all 55 city departments rather than gutting public health and human services, his budget director, Sophia Kittler, told The Standard.
“This is a loss to the whole city,” Kittler said. “We’re treating it as a citywide deficit.”
The impacts are already here. Government layoffs loom, and nonprofit social safety-net programs know they face the chopping block. In anticipation of deep layoffs, labor has signaled a historic general strike is possible next year. In the meantime, tens of thousands of San Franciscans may lose crucial services, from food stamps to doulas.
So what can San Francisco do to save itself? And how devastating will the impacts be? The answers are uncertain, but the city is preparing anyway.
Since it’s a city and a county, San Francisco is uniquely vulnerable to federal meddling.
Large counties often administer healthcare, serving as a pass-through for federal funding, creating a single vulnerable pot of money. But the city also depends on federal and state grants, both of which are primarily funded by the federal government.
“Our legal efforts to defend our communities and protect our federal funding are paying off,” Chiu said in a statement. “We have seen many early wins in the lower courts, preserving billions of dollars in federal funding for our city.”
Yet the risk still persists. The largest of these suits seeks to challenge the Trump administration’s effort to axe grants for any program it deems related to diversity, equity, and inclusion. As Chiu’s office wrote (opens in new tab), Trump’s rules sought to instill his anti-immigrant, anti-LGBTQ+, anti-choice, and anti-equity policy preferences on federal spending.
A court granted a preliminary injunction against Trump imposing new restrictions on those grants last year, Chiu’s office said the decision preserved billions in funding that help San Francisco support early childhood development, critical health services, safe and effective transportation, and housing to our most vulnerable.
Each lawsuit represents a distinct fiscal vulnerability, a situation that insiders speculate will prompt Lurie to budget cautiously. He doesn’t have much room for error — the city has about $433 million in its federal-risk reserve fund, which Lurie and the Board of Supervisors created last year.
If the worst federal funding losses happen, it won’t be enough.
You might’ve noticed that downtown still isn’t the hotbed it once was. That carries economic implications, since the city largely fills its general fund coffers from taxes generated by employee-filled high rises, including property taxes. In that weakened economic state came Trump’s One Big Beautiful Bill Act, also known as H.R. 1, which threatens to see tens of thousands of San Franciscans lose Medi-Cal coverage and CalFresh food access — which in turn will prompt a roughly $300 million, two-year loss in federal payments to San Francisco to administer those programs locally.
It isn’t a straight cut. Instead, the legislation implemented stricter work and filing requirements and is projected to cause people to lose their care. The Lurie administration budgeted $34 million to help those people navigate stricter filing requirements and retain access to Medi-Cal and CalFresh, but it remains to be seen how successful the effort will be.
The funding losses primarily hit the Department of Public Health and the Human Services Agency. Those program losses equal roughly half of the city’s $643 million budget deficit.
Lurie’s office chose to distribute the pain of that funding loss across the city’s 55 or so departments. Kittler said the other choice would be to decimate public health programs and food stamps, and that wasn’t a choice at all.
The Board of Supervisors will haggle with the mayor over budget details throughout June. There aren’t many choices before them.
The city can either cut its funding or increase its revenue. Both choices carry risk.
As nonprofit leaders have told The Standard, Lurie’s intention to cut community social service programs may have downstream impacts: if nonprofits that help tenants fight their evictions lose funding, for instance, more people may pressure homeless services in the coming months.
Supervisor Conie Chan, the budget chair, laid out another plan in an early-May budget briefing with reporters. She said San Francisco shouldn’t live in fear of D.C.
“You can absolutely plan that way. But then what you will end up with is just cuts and cuts and cuts,” Chan said.
Instead, she said, Lurie should dip into reserves until 2028, when the Overpaid CEO Tax would begin generating an estimated $300 million annually.
Dipping into reserves could leave San Francisco vulnerable to other Trump cuts, which may be anathema to risk-averse Lurie. It is also wholly dependent on voters approving the tax in June.
Lurie opposed the tax. But if it does pass, he’ll have one more tool to forestall the worst of Trump’s cuts, whether he wanted it or not.
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