Supporters of Proposition C cheer during a rally across from Civic Center Courthouse, where a court case attempting to kill the measure was being heard on Wednesday, July 3, 2019. (Kevin N. Hume/S.F. Examiner)

Judge upholds legality of SF tax measures funding childcare, homelessness services

Business, anti-tax groups argued two-thirds majority required for approval

A San Francisco judge has rejected a legal challenge against tax measures passed by voters last year that will raise millions for childcare and early education and for homelessness services.

Business and anti-tax groups sued to block a tax on commercial rents, approved by 51 percent of San Francisco voters in June of 2018, that is expected to raise upwards of $145 million annually for childcare and early education services and salary increases for educators in the field.

The opponents, led by the Howard Jarvis Taxpayers Association, argued that the measure was invalid because it did not pass with a two-thirds majority.

The challenge also applied to the “Our City, Our Home” measure, passed in November, that will raise more than $300 million annually for housing and homelessness services. Both measures were labeled Proposition C on the ballot.

Schulman issued two rulings Friday validating both measures after a hearing in court on Wednesday.

City Attorney Dennis Herrera filed a validation action to obtain a ruling on Our City Our Home, which imposes an additional tax on businesses that earn more than $50 million in gross receipts annually. The measure was opposed by business groups and Mayor London Breed, but passed with 61 percent of the vote after a campaign that drew support from Salesforce CEO Marc Benioff, among others.

“These cases have always been about upholding the will of San Francisco voters. We’re pleased the court has confirmed that when voters act through the initiative process, a simple majority vote is required,” said City Attorney Dennis Herrera in a statement on Friday. “The initiative right is about direct democracy. It is one of the most precious rights of our democratic process. These decisions are a victory for voters and a victory for democracy.”

The challengers asserted that both measures constituted a “special tax” and therefore should have required two-thirds voter approval. The City argued that because the measures were placed on the ballot by way of voter signatures, they only needed a simple majority to pass.

The state’s constitution has been amended by a number of voter initiatives to place limitations on state and local governments’ ability to collect taxes. Citing a similar ruling in the 2017 Supreme Court case California Cannabis Coalition Vs. City of Upland , which addressed the issue of whether the voters’ ability to impose taxes via ballot initiatives was also limited, Schulman ruled that the provisions were not intended to limit voters’ rights.

The Our City Our Home initiative garnered over 28,000 signatures to qualify for the ballot, more than any other voter initiative in the city’s history, according to its proponents, who said in a statement on Friday that “Lives will be saved from this decision today.

“This decision to uphold the will of the voters will result in immediate relief for San Francisco’s homelessness crisis,” said the Our City Our Home Coalition in its statement.

The City has begun collecting the tax but has held off on spending the money pending the outcome of the legal challenge. The City’s Controller will now have to decide whether to begin spending the money.

An attorney for Howard Jarvis indicated on Wednesday that the group planned to file an appeal of Schulman’s decision.

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