San Francisco's Budget Outlook Improves, but Mayor Seeks to Cut Key Tax

Mayor Daniel Lurie and Supervisor Bilal Mahmood propose repealing a tax on high-end real estate deals that is helping balance the city's budget.

Apr. 2, 2026 at 2:49am by Ben Kaplan

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San Francisco's budget deficit has been reduced by $127.8 million, thanks in part to a recovery in real estate transfer tax revenues. However, Mayor Daniel Lurie and Supervisor Bilal Mahmood are proposing to repeal this tax, which is generating significant funds for affordable housing and other social services. The People's Budget Coalition argues this would be 'fiscally irresponsible' given the city's improving financial outlook.

Why it matters

The real estate transfer tax has proven to be a reliable revenue source for San Francisco, helping to fund critical social programs and services. Repealing this tax could undermine the city's economic recovery and limit its ability to invest in affordable housing and other priorities.

The details

San Francisco's General Fund shortfall is now projected to be $168.5 million, down from a previous estimate of $296.3 million. This improvement is largely due to a rebound in real estate transfer tax revenues, which are expected to reach $400 million by fiscal year 2029-30. However, Mayor Lurie and Supervisor Mahmood are proposing to repeal Proposition I, a tax on real estate deals worth more than $10 million. The People's Budget Coalition argues this would be 'incoherent and fiscally irresponsible' given the tax's importance to the city's budget.

  • San Francisco's budget deficit has been reduced by $127.8 million compared to the last projection.
  • Real estate transfer tax revenues are projected to reach $400 million by fiscal year 2029-30.
  • Mayor Lurie and Supervisor Mahmood are proposing to repeal Proposition I, a tax on high-end real estate deals.

The players

Daniel Lurie

The mayor of San Francisco who is proposing to repeal the real estate transfer tax.

Bilal Mahmood

A San Francisco supervisor who is co-sponsoring the proposal to repeal the real estate transfer tax.

People's Budget Coalition

A coalition that argues repealing the real estate transfer tax would be 'fiscally irresponsible' given the city's improving budget outlook.

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What they’re saying

“'At the exact moment this revenue source is recovering and proving its strength, the Mayor is proposing to weaken it. We cannot afford to lose this critical funding source; it is incoherent and fiscally irresponsible to propose tax cuts on the wealthiest real estate developers in a financial moment like this.'”

— Kyle Smeallie, Policy Director of the San Francisco Community Land Trust

What’s next

The mayor and supervisor's proposal to repeal the real estate transfer tax will likely face scrutiny from the Board of Supervisors and the public, who may argue the tax is a crucial source of funding for affordable housing and other social services.

The takeaway

San Francisco's budget outlook has improved, but the mayor's proposal to repeal a key tax that is helping to balance the city's finances raises concerns about the city's ability to maintain critical social programs and services. The debate over this tax cut will likely be a central issue in the city's ongoing budget discussions.