S.F. mayor in San Jose during big budget huddle

(02-11) 20:46 PST -- As more than a dozen business executives, labor leaders and city officials hunkered down for a three-hour meeting Tuesday on fixing San Francisco's staggering budget shortfall, Mayor Gavin Newsom held court at another gathering - in San Jose.

Newsom headed to the South Bay city to host an evening town hall meeting as part of his unofficial campaign for governor. And while San Francisco business leaders and elected officials attempt to grapple with the local effects of a worldwide economic slowdown, many wonder whether the mayor should be spending more time running the city instead of running for governor.

The Tuesday budget meeting was organized by Board of Supervisors President David Chiu in an attempt to build consensus among key groups over how to deal with the city's unprecedented $576 million budget shortfall for the fiscal year beginning July 1. That the mayor didn't attend the San Francisco meeting disappointed many in attendance.

"One of the points that this group of 16-plus people has unanimously agreed upon is that the mayor should be convening this process," said one business leader, who did not want to be named because of the sensitivity of the talks. "Everyone is just scratching their heads - he is the ultimate communicator. If anyone can bring together consensus, it's Gavin Newsom."

The business leader said the group was "shocked" that the mayor's office was not at the table - not even one of his aides.

Newsom pointed out that he and his staff have been meeting with labor representatives and business leaders separately for weeks - including a negotiating session Wednesday with the city's largest labor union - but many people close to the issue have argued that the only way to get consensus on such controversial issues as tax increases, budget reform and wage concessions is to bring everyone into one room.

Chiu said he scheduled the meetings - another meeting was held Sunday, and more are expected - because business and labor officials had been clamoring for them.

Newsom said he has been extensively involved in the budget process, despite multiple out-of-state trips - all on city business, he said - that kept him out of City Hall for almost one-third of January. His scheduled campaign events include seven more town hall meetings over the next month and a half. The next is at 5:30 p.m today in Stockton.

Separate meetings

The mayor said he's met with labor leaders multiple times, attempting to get $90 million in wage concessions, and held his own meeting with business executives and Chiu on Friday. Wednesday he announced a new plan that he said will galvanize local companies hit hard by the recession and encourage long-term economic growth.

"I don't know that you can humanly be any more engaged in this (budget) process than I already am," Newsom said Tuesday after the San Jose campaign event.

He also noted that the mayor - not the Board of Supervisors - has the legal authority to negotiate with unions.

But some people challenged Newsom's assertion that he and his staff have been meeting with all the major stakeholders in the city. Scott Hauge, a San Francisco business owner who is president of the advocacy group Small Business California, said the meetings that Chiu organized this week were the first occasions small business has been brought into City Hall talks since budget negotiations started heating up several weeks ago.

"The mayor has not brought us to the table, which is very frustrating because we are the major employers in San Francisco and we are really hurting right now," said Hague, adding that he's worked with every mayor since Dianne Feinstein and that it is unprecedented to have a board president, not the mayor, convene these types of discussions.

Newsom has downplayed the urgency of the budget crisis, noting that he doesn't have to turn in his balanced budget for 3 1/2 months, and that the midyear cuts he instituted in October have shaved $115 million off of next year's projected deficit.

Yet many elected officials and other city leaders said that with such a profound deficit, a new focus on collaboration and early consensus-building is necessary. Privately, many city department heads said they're frustrated that the mayor has asked them to cut 25 percent of their budgets but has offered them little personal guidance.

Unusual timing

In fairness, several longtime city leaders said, it isn't typical for the mayor to be heavily involved in the budget process this time of year. But this isn't a typical budget year, and they said the mayor's participation is key - even if only for reassurance.

"To a certain extent, the bureaucracy takes care of itself," said Aaron Peskin, former president of the Board of Supervisors. "The difference between most years and this year is that this (deficit) is half the discretionary money in the budget. This is not a drill - this is a major fire spreading out of control."

A point of serious disagreement between the mayor and other city leaders is a proposed June 2 special election that would ask voters to raise various taxes. The supervisors voted Tuesday to move forward with the election, which labor leaders have pushed, but the mayor and business community oppose the June time frame. Chiu has been attempting to broker a deal between the two sides, and said if that occurs, he will support moving the election to a later date.

Meanwhile, Newsom said the focus on a special election has taken time and energy away from more helpful budget solutions aimed at tackling the larger economic slowdown. And, as for his reluctance to attend meetings organized by Chiu, Newsom said that his own budget meetings with a variety of city leaders have to take precedence over Chiu's roundtable.

"I appreciate David's enthusiasm," Newsom said Tuesday. "But David can't negotiate wage concessions from labor."

E-mail the writers at mlagos@sfchronicle.com and eallday@sfchronicle.com.