New taxes could be in store for The City
By: Joshua Sabatini
Examiner Staff Writer
January 27, 2009
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| Solution or quick fix? The City could generate millions if it increases the sales tax by 0.5 percent. (Cindy Chew/The Examiner) |
SAN FRANCISCO — Raising the sales tax in The City from 8.5 percent to 9 percent would raise more than $55 million a year, according to a new report from the Office of the Controller.
The report examines 16 possible tax increases or new taxes — including an expanded hotel room tax, an expanded payroll tax and a new residential property tax — and what they could generate for city coffers.
As The City faces one of the largest budget deficits in history, several elected officials say asking voters at a June special election to approve several tax hikes is the best way to help balance the budget and soften the blow of the budget slashing.
The Board of Supervisors is scheduled to vote today on whether to hold the June 2 special election for residents to vote on a number of tax increases. The board is also scheduled to vote on waiving deadlines, which could give them at least another week to introduce specific taxes for the ballot.
Supervisor Chris Daly said he supports the special election, estimating about $100 million in additional revenue if voters approve several tax hikes.
“There will be significant cuts. People will die because of it. The question is how many people? The cuts can be mitigated by more revenues.”
Others, however, are resistant to that course and say the city needs to hold off on any tax increases and instead balance the budget with cuts, layoffs, fee increases and efficiencies alone.
Board of Supervisors President David Chiu said he would only support a June election “if we can develop some consensus among a lot of different stakeholders.”
That has yet to occur.
“There are still conversations going on right now,” he said.
Mayor Gavin Newsom’s office is firmer in its stance.
“The Mayor’s Office is still in negotiations with labor for givebacks, and Mayor Newsom is still opposed to a special election in June,” mayoral spokesman Joe Arellano said,
Supervisor Carmen Chu, who sits on the board’s budget committee, said tax increases come with negative economic impacts and favored balancing the budget without them, which, she says, provides city officials with the chance to figure out how to “reduce expenses and to see where we can gain some efficiencies.”
Gabriel Metcalf, executive director of the public policy think tank San Francisco Planning and Urban Research Association, warned against quick fixes instead of long-term solutions.
“Random tax increases could make our problem worse,” Metcalf said.
Mayor Gavin Newsom must submit a balanced budget for the fiscal year beginning July 1 to the Board of Supervisor by June 1. He is faced with closing a projected $460 million deficit.
Looking at new, expanded taxes
How tax increases could soften the blow of The City’s $460 million deficit projected for fiscal year beginning July 1 based on fiscal year 2007-08 data.
| Current taxes | Percentage of general fund revenue | General fund revenue | Scenario | New revenue |
| Payroll tax | 1.5 | $385.18 | Increase 0.1% | $25.68 M |
| Sales tax | 1 | $111.41M | Increase 0.5% | $55.71 M |
| Hotel room tax | 14 | $165.54 | Increase 1% | $11.82 M |
| Property parcel | N/A | N/A | Introduce $100/ tax-residential parcel | $17M |
| Gross receipts | N/A | N/A |
Introduce 1% tax | $30.6M |
| Local vehicle license fee | N/A | N/A | Introduce 0.65 % | $33.4 M |
Source: Controller’s Office
* Preliminary estimates
