San Francisco is set to provide a 12% pay increase to the majority of its city workers over the next four years, coupled with a guarantee against layoffs until 2029. This agreement, reached by Mayor Daniel Lurie and ten unions representing approximately 25,000 municipal employees, comes ahead of the June 30 expiration of current contracts and despite a projected $450 million budget deficit for the 2029 fiscal year.
The deal, announced Tuesday, extends to June 2029 the current contract's protection against layoffs. When combined with previously scheduled raises, the total compensation increase for workers could reach 14.31% by 2031, according to the mayor's office. Lurie stated the contract extension "honors their work, provides stability and recognizes the cost-of-living increases affecting so many San Franciscans."
This wage increase could complicate the city's efforts to address its ongoing fiscal challenges. San Francisco's financial outlook remains troubled, with expenses projected to outpace revenues in the coming years. The city is anticipating a budget shortfall of approximately $936 million over the next few fiscal years, including deficits of $296 million in fiscal year 2027 and $640 million in fiscal year 2028. The mayor's office previously helped close a short-term deficit of at least $642 million with a $17 billion budget.
Labor leaders emphasized the necessity of the raises. Sarah Perez, vice president of IFPTE Local 21, noted that "City workers are stretched thin and the cost of living is shooting up like never before." She added that the agreement "represents stability for residents and city workers."
It remains unclear how the city will fund the increased salaries in the long term. The mayor's office indicated that funding mechanisms for the wage increases will be addressed in the upcoming budget cycle. Lurie may have averted a potential strike by reaching this agreement.
The labor deal is not yet finalized and requires ratification by rank-and-file union members.