Friday, February 15, 2008

On New Revenue

While the Mayor's appropriating funds from cash strapped City Departments to pay increases to some of his top aides highlights a double standard within his administration, the bigger problem is the overall budget deficit of $233,000,000. That's a big number and many of us across San Francisco's body politic fear impending cuts. In the past couple of years of decent budgets, we've seen the return of past services like increased Rec and Park employees and public health nurses, we've also seen the growth of new services cut out of whole cloth -- like the 311 Program and the San Francisco Health Plan. Each program has value and its constituency who will fight to preserve it.

There are those who believe that government has gotten too big and that in needs to downsize. I disagree with this point of view. Much of these cost of government is salaries. People make the City run. People make San Francisco livable and people who work need to keep pace with the high cost of living.

All the same, I worry about the kinds of struggle we're going to need to preserve services and jobs.

There is a way out -- raising revenue through progressive taxation. Progressive taxation means scaling taxes so that those who have more (and in the past few years, those who received big tax breaks from the Bush Administration), pay more.

In the past few year's that I've worked at City Hall, I've pursued various revenue options such as doubling the tax on property that is sold over $2 million and "closing the tax loophole" on partnerships -- such as accounting and law partnerships . Together these could yield up to $40 to $45 million during more sluggish economic times and much more during boon years.

I've also looked at bringing back the gross receipts business tax that we lost when some of SF's biggest corporations sued the city to have it eliminated. The gross receipts tax could be adjusted to affect mostly high end businesses that do business transactions that amount to many millions of dollars. The current business tax -- the payroll tax is seen as a job inhibitor. If done properly the city could replace the payroll tax with the gross receipt tax. At the same time, the city could adjust the new gross receipts tax to increase revenue and help get us out of this deficit.

According to Propositions 13 and 218, only the voters can approve local tax increases and only when the elective city council or its equivalent is up for election (in SF when the Supervisors are up for election) can we place a general tax on the ballot for voters to consider. A general tax is a tax that is not dedicated for a specific purpose.

Raising revenue is only one way to balance next year's budget without cutting significant program and services. The Board of Supervisors Budget and Finance Committee may have to budget services and have them contingent on the passage of a tax measure on November's ballot. It's not ideal and it's risky, but there may be no other option.