San Fransisco Compares with South Dakota

I know, I know, one of them is near-tropical city on a bay, the other is a cold block of freezer burn bounded by North Dakota, Montana and other exciting and largely desolate states. Despite all that, a few things happened recently to bring my attention to points of comparison between these two places.

Population

Both of these geographic areas have roughly 800,000 residents.

Land Mass

San Franscisco is made up of 46 square miles of non-water real estate–South Dakota has 1600 times that.

Median Income

$71,451 in San Fransisco but only $43,500 (for the most recent years I could get the info) in South Dakota.

Financial Viability

Here’s where things become more interesting. In a recent article, it turns out that things are far from rosy in this destination city on the bay:

It’s time to face facts: San Francisco is spectacularly mismanaged and arguably the worst-run big city in America. This year’s city budget is an astonishing $6.6 billion — more than twice the budget for the entire state of Idaho — for roughly 800,000 residents. Yet despite that stratospheric amount, San Francisco can’t point to progress on many of the social issues it spends liberally to tackle — and no one is made to answer when the city comes up short.

By comparison, though South Dakota could use better management, it has a budget of slightly less than $4 billion. Of course, I’ve got to think that we’ve got way more miles of road than does San Fransisco–to mention just one thing that tends to have quite a maintenance cost associated with it.

While South Dakota is generally seen as a place where if one works hard one can get ahead, San Fransisco is making things easy:

This city is a mecca for people in search of a government handout that they can hand out. According to a 2009 analysis, San Francisco spends around 41 percent of its discretionary budget — about half a billion dollars — on nonprofits, mostly to provide social services for the poor, homeless, elderly, and others.

Many cities contract with nonprofits because it’s cheaper than using city workers. Government is now paying the tab for services that used to be undertaken by families, churches — or, frankly, no one. But a 2009 University of San Francisco study notes that this city is to nonprofits what New York is to big musicals: “Per capita expenditures by operating nonprofits in San Francisco are almost double that of the rest of the Bay Area, and more than twice that found in Los Angeles or [the whole of] California.”

Note that government has stepped in to take over what was previously the purview of families and churches. Now, there are families and churches who are not upholding their God-given responsibilities because, as my grandmother would say, “The Good Government” is helping out.

Then, there is the questionable benefit of the labor unions:

You can’t get San Francisco running efficiently, because that would require large numbers of unionized city workers to willingly admit their redundancy and wastefulness. Inefficiency pays their salaries. “It’s been going on for decades,” Peskin says.

This problem comes up almost every time the city negotiates labor contracts, which is part of the reason San Francisco is constantly on the brink of fiscal ruin. Politically powerful unions — the progressives are beholden to the service unions; moderates cater to police, firefighters, and building trades; and Republicans … what’s a Republican? — negotiate contracts the city knows it can’t afford. Politicians approve them, despite needing to balance the budget every year, because the budget impact of proposed contracts is examined by the Board of Supervisors only for the following year, no matter how long contracts run. According to former city controller Ed Harrington, it has become common practice not to schedule any raises for the first year of a contract, but to provide extensive raises in later years.

The result is a contract that looks affordable one year out, then blows up in the city’s face. City employees receive up to 90 percent of their already generous salaries in pensions and many also receive lifetime health care — meaning that as they retire, labor costs soar.

South Dakota has about 6.5% union employees. While I’m not certain what San Fransisco’s numbers are, the state of California is at 19.5% or thereabouts. I’m guessing that SF might be even higher than the state average. A number of those union members are city employees. In fact, the city has about 28,000 employees (just about all of whom are unionized). Of those city employees, 8,000 of them are bringing home salaries over $100K.

With all of that, the city is looking at a budget deficit for 2010 of about $500,000,000. That is real money–and it’s going to cause some real difficulties in dealing with it:

[Board of Supervisors President] Chiu  declined to speculate on which city departments may be hit the hardest. The cuts could be announced by the mayor at the end of [2009] and would then have to be approved by the board. “I think virtually everything is going to be on the table,” he said. Chiu said he would fight to protect “essential, core services” such as police, fire and health services to the city’s most vulnerable, including seniors, the homeless and the mentally ill.

By law, South Dakota must have a balanced budget. It does not seem as though San Fransisco has quite the same restraints.  Despite that, I think there are a number of things which South Dakota can learn from San Fransisco–not the least of which is that if government is the answer, to whom can one turn when government is no longer able to support itself?

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