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Perfect storm of bad economic news led to San Francisco’s budget scramble

Until last summer, the recession was something that happened somewhere else. The credit crunch was slow in reaching San Francisco because it was insulated from the subprime crisis unfolding across the country.

But now the recession has hammered the city’s budget and led to the largest shortfall in more than two decades. With a $438 million deficit, the city is scrambling to make up the difference — slashing 1,600 jobs, auctioning taxi medallions, slapping smokers with taxes to clean up cigarette butts.