Set-asides tie budget into knots

The dangerous duo of set-asides and ballot-box budgeting has created a vast amount of fiscal trouble throughout California. Nearly one-fourth of San Francisco’s discretionary funds are now “set aside” in voter-mandated spending levels for parks, libraries and — as of November — Muni. There are also set-aside staffing minimums for city police and firefighters plus ongoing subsidies for the San Francisco Unified School District.

It is relatively easy to sell the public on voting for set-asides, using the basic slogan of, “Support a good cause without raising your taxes.” The big problem with set-asides is that they lock up millions of dollars in the general fund, in effect taking away the money from The City’s many other legitimate needs.

Now Supervisor Chris Daly is again trying to set aside another $33 million a year for below-market-rate housing. He attempted to remove a similar amount from city reserves in last spring’s budget wars. When Mayor Gavin Newsom refused to spend the money, Daly threatened to cut dollars from the budget for street repairs and police staffing, and he lost his chairmanship of the board’s budget committee as a result.

Daly’s persistent tunnel-vision onspending for more housing is particularly questionable at this moment, when The City just announced a $229 million deficit looming for next year. Newsom has called for 13 percent budget cuts across every department, blaming the shortfall partly on the number of voter-mandated spending requirements that handcuff San Francisco’s ability to balance a budget while meeting the basic needs of all residents.

But Tuesday the Board of Supervisors is to vote on Daly’s proposed charter amendment requiring 2.5 cents of every property tax dollar to be reserved for housing — in addition to making this year’s $88 million budgeted for housing into a baseline minimum. Daly already has four supervisor votes and a good chance to pick up the final two needed for putting the amendment onto the November 2008 ballot, where it would pass with only a majority vote. Affordable-housing bond measures requiring two-thirds voter approval were narrowly defeated in 2002 and 2004.

San Francisco’s newest set-aside would subsidize new apartments for households earning 80 percent or less of the median income, which for a family of four is $64,267 a year. Assuredly, The City badly needs more family housing for the lower-income workers who are necessary to keep the economy functioning. But even those less affluent residents — like any other San Franciscans — have a full spectrum of other needs, including a public hospital that is not falling apart.

Next November’s ballot is expected to contain an $800 million bond measure to rebuild the aging and outmoded San Francisco General Hospital that is a vital lifeline for The City’s poor, as well as being California’s most important trauma center north of Stanford University. Passage will require two-thirds voter approval, and competition from the housing set-aside could well play a large part in defeating it.

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