As San Francisco grapples with a budget deficit of roughly $400 million and ballooning pension costs that could decimate funding for city services, freshman District 2 Supervisor Mark Farrell touts his election as being particularly propitious due to the business smarts he brings to the board.

The native San Franciscan – his parents still live in the Marina home he grew up in – earned his law degree at the University of Pennsylvania Law School and spent time in Belfast studying the Irish legal system. Upon returning to the Bay Area he landed a job with a law firm in Palo Alto and then became an investment banker with Thomas Weisel Partners in San Francisco.

Two years ago he helped launch his own venture capital firm, Quest Hospitality Ventures, which focuses its investments in the tourism and hospitality sectors.

"Having that business background, especially given our budget problems we face now, not just here in San Francisco but the state and federal levels as well, I thought I could make a difference in the dialogue and debate at City Hall," said Farrell during a recent editorial board meeting with the Bay Area Reporter.

As for how to cut the city's budget, Farrell is short on specifics, saying he is still figuring out what the specific costs are and what cuts would be palatable.

"There are a lot of details to figure out," said Farrell, who sits on the board's government audit and oversight committee. "That process is going to start right now."

He predicted, though, the city is facing very difficult fiscal choices.

"We are at a point of time where most departments feel they have cut where they can. Now we are at the point where we will have to cut into the muscle of our services," said Farrell.

One piece of the budget puzzle that needs to be addressed is the city's pension costs, said Farrell, adding that is "the biggest issue we face right now."

He said he finds it "embarrassing" that the city's retirees are set to receive cost-of-living bonuses totaling $170 million this year despite the news that the San Francisco Employees' Retirement System has an unfunded liability of $1.6 billion.

"We need at City Hall to make sure that can not happen again," he said. "Those types of things frustrate everyone else with our city government. I think it is a big deal."

Farrell opposed the pension reform measure Prop B on last November's ballot because he saw it as a "backroom deal" that was not equitable in how it treated city workers.

Now in office, he demurred when asked how he would solve the pension issue. He said he prefers to wait to see what comes out of meetings between city leaders and labor union representatives who are discussing various pension reform proposals.

But there is one change Farrell would likely support.

"I am part of the city employees who doesn't pay anything for my pension at all. That is wrong. We all should pay into it," he said.

Farrell, 36, is the first to acknowledge he is a political novice. His entry into the city's often hard-knuckle politics was largely due in part to he and his wife Liz's two children, Madison, 5 and Jack, 3.

"For me, personally, it was a large part being born and raised here and making that commitment to raise our children here in San Francisco," said Farrell, who graduated from St. Ignatius College Preparatory, a private Catholic high school. "A lot of young families have that dialogue if they want to be in the Bay Area and work here do we stay in the city or leave. We made a commitment to stay.

"Once that happened I really started to look at our city government and paid closer attention to it. I became increasingly frustrated with the personalities at City Hall and the policies," added Farrell, who is aligned with the city's more moderate political faction and served on the board of Plan C, whose founders included many LGBT people looking for a more middle-of-the-road political approach.

His winning the seat representing the city's Marina and Pacific Heights neighborhoods came as a surprise to the city's progressive political establishment that had lined up behind Golden Gate Bridge district board president Janet Reilly. While Reilly appeared to hold a slight edge on election night, her lead evaporated once the city's ranked choice voting kicked in and Farrell eked out his victory with 258 more votes.

During the campaign Reilly was attacked by another candidate in the race, assistant United States attorney Abraham Simmons, for garnering endorsements from the city's gay community, including the B.A.R. , the Alice B. Toklas LGBT Democratic Club and various out public officials. The implication being not only that the concerns of LGBT people somehow didn't warrant attention from the District 2 supervisor but that only straight people reside in that part of town.

Asked recently about the comments, Farrell disavowed them, saying that he "absolutely, without a doubt" sees the LGBT community as being a part of his district.

"Not only my district but the whole city of San Francisco," said Farrell, who plans to have his children walk with him as part of his official contingent in the Pride Parade, which will be the family's first time attending the LGBT event. "We need people here on the Board of Supervisors who can represent the entire city of San Francisco and, obviously, the LGBT community is a huge part of that. I look forward to working with the community and supporting their rights and moving forward together as a whole."

A practicing Catholic, Farrell nonetheless supports marriage equality. And while in office only a matter of weeks, he artfully dodged a question about what he thought of his archbishop's leading the charge to pass Proposition 8, the ban against same-sex marriage voters adopted in 2008.

"That is a great question. For me, from a personal perspective, I am a Catholic; that is my community. I am part of a Catholic family. But that doesn't mean, much like being part of a political group or party, you are going to agree with every single tenet that the church believes in," said Farrell. "To me, the LGBT community is part of the fabric of San Francisco. I believe we need to do all we can to support the community. I will do my part to support the community. It is who we are as San Franciscans."

Farrell is a proponent of changing how the city elects the 11 members on the board. Rather than having all of them come from their own districts, he instead favors a bifurcated approach, with some representing designated districts and the others elected citywide.

While not his intent in pushing such a change, the approach could in fact increase LGBT representation at City Hall and make it easier for lesbian candidates to win office. Since the city switched to district elections in 2000, no lesbian has been able to be elected a city supervisor. And some argue district elections impede out supervisors' ability to seek higher offices.

To Farrell's mind, splitting how the board is elected would bring more balance to debates on policies and eliminate the provincialism that comes with having supervisors accountable to only their own constituents and not residents citywide.

"We need to move to a hybrid system in San Francisco on board elections with a 6/5 split for districts and citywide supervisors which ever way. That, to me, would make a lot of sense," he said.

And although he benefited from ranked-choice voting, Farrell also supports "tinkering with" the system in order to prevent a winner emerging who a majority of voters did not support on their ballot. While he feels the system worked in his own race, he pointed to the outcome in District 10 last fall, where Malia Cohen emerged the victor after 19 rounds of ranked voting, as problematic.

"I think there are problems with it. From my point of view District 2 and District 10 were very different how ranked choice voting played into it. Because District 2 had two clear frontrunners in terms of who ended up getting the votes. I think it worked," he said. "But ultimately it was a close race, no doubt about it. I have all the confidence to say we would have prevailed in a runoff."

While he stressed that he believes Cohen "will be great as a supervisor without a doubt," Farrell questioned if the process was fair in the end to voters in District 10.

"A majority of District 10 voters did not put the winner on their ballot. Intuitively, that does not seem right," he said. "I would be open to tinkering with it but not sure about specific changes."

He does believe that last fall's election has brought a change to the city's political discourse.

"I think the civility, the tone has changed without a doubt," said Farrell.