San Francisco is facing a $483 million deficit for the coming fiscal year.
"There are no grand ideas," Newsom proclaimed, arguing there could be only many small solutions, including department cuts, layoffs, new revenue measures and concessions from city unions to reduce salaries and overtime.
Newsom said the city had been confronting thousands more layoffs of city workers, but under his budget, about 350 city workers would be facing layoffs this summer. None of those laid off would be police officers or firefighters, he said.
Newsom stressed that the budget included no new tax increases, and prioritized investment in infrastructure, jobs, public safety and fighting homelessness.
"We were able to avoid, I think, the kind of cataclysmic expectation of devastation" that some anticipated, Newsom said.
He delivered the announcement to department heads, city officials and reporters inside a crowded art gallery at Market and Sixth streets.
Newsom specifically mentioned funding to repave Market Street, part of the much hoped for revitalization of the formerly bustling mid-Market business and theater district. He also noted the budget included funding for new arts programs in the area and 30 new beat officers to police the neighborhood.
Other funding items Newsom highlighted included workforce development projects, an increase in summer jobs and summer camps for youth, and money for to build new or renovate existing branch libraries.
He said there would be no cuts to community-based arts programs.
The budget also includes $5.9 million for improvements to the Police Department's scandal-plagued crime lab.
"If that's all I'm going to get, I'll take it," said police Assistant Chief Jeff Godown, who is in charge of reforming the lab, after the announcement.
Two of the city's biggest departments, Public Health and Human Services, will be reduced by $22.1 million and $10.6 million respectively, according to Newsom, though he stressed that represented only a small fraction of their total budgets.
Newsom said the budget would prioritize residential drug treatment and would eliminate those outpatient clinics that "don't work."
The city's universal health care program, Healthy San Francisco, will remain fully funded, he said.
While domestic violence programs under the Human Services department would remain intact, Newsom noted there would be controversial cuts to its nutrition program.
The budget would also add hundreds of units of supportive housing for the homeless, according to Newsom.
Another controversial proposal in the budget for a one-time fee for city apartment owners to convert their properties to condominiums is expected to produce "a big-time ideological discussion" with the Board of Supervisors, Newsom said.
The board will consider Newsom's budget in the coming weeks.
Board of Supervisors President David Chiu said many of the challenges Newsom's budget will face at the board will center around cuts to public health and social services.
Chiu said he wants to make sure proposed cuts to the city's low-income single-room occupancy hotels are fully restored.
Budget and Finance Committee chair Supervisor John Avalos said the condo-conversion fee will draw the most fire from supervisors. He claimed it would open the door to more speculation in the market and put vulnerable residents, seniors and families at risk.
Newsom spokesman Tony Winnicker said there is currently a "huge backlog" in the city's condo conversion program, which is attractive to owners because it raises property values. He said the fee would accelerate the program and that the conversion requires tenant approval.