SF mayor strikes sweeping pay deal with city workers as massive deficit looms

Most of San Francisco city workers are set to get 12% raises over the next four years, plus a guarantee of no layoffs — despite a projected $450 million deficit for the 2029 fiscal year.

Mayor Daniel Lurie and ten unions representing about 25,000 city workers reached a surprise labor deal Tuesday with those terms ahead of the June 30 expiration of the unions’ current contract, three months after he handed out similar raises to cops and firefighters as part of a record $17 billion budget.

“We put forward a contract extension that honors their work, provides stability and recognizes the cost-of-living increases affecting so many San Franciscans,” Lurie said in a statement.

“We have worked closely with labor leaders in recent weeks to put forward this offer, and I am grateful for their partnership in supporting the workers and completing this process promptly so we can stay focused on providing excellent services and driving our city’s comeback.”

Combined with already-promised raises in the current contracts, the total pay bump could be 14.31% through 2031, the mayor’s office stated.

No layoffs would happen before June 2029.

The more expensive salaries could hurt San Francisco’s attempts to address its ongoing budget crisis.

Lurie’s record-breaking budget helped close a short-term, two-year budget deficit of at least $642 million, but the city’s fiscal outlook remains troubled as expenses outpace revenues in the coming years.

San Francisco is projecting a budget shortfall of approximately $936 million with a $296 million deficit in fiscal year 2027 and $640 million in fiscal year 2028.

Still, labor leaders in statements claimed the raises are very much needed.

“City workers are stretched thin and the cost of living is shooting up like never before,” said Sarah Perez, vice president of IFPTE Local 21. “Whether you rely on transit, enjoy beautiful parks, or use our libraries, this represents stability for residents and city workers.”

Lurie will have to navigate how to close the city’s deficits in the upcoming years alongside the promised pay package.

It is unclear how the increased salaries will be funded in the coming years, the San Francisco Standard reported, but the mayor’s office said that will be addressed in next year’s budget.

Lurie may have avoided a political headache by avoiding the possibility of a widespread strike.

The labor agreement is not yet finalized. Rank-and-file union members must still ratify the deal.