City Budget Shock

Special to Fog City Journal
March 3, 2009

Hats off to the organizers of Monday’s City Budget Town Hall. Hopefully this gathering will help spark a more adequate response to our city’s current budget crisis. At this point, we are all painfully aware of the city’s predicament and the effects of the economic depression on our fiscal situation. The staggering deficit projections have us reeling and almost incapable of understanding how to cope with the sheer size of the hole we need to fill. How are city leaders responding to the crisis?

Anyone familiar with Naomi Klein’s thesis in Shock Doctrine: The Rise of Disaster Capitalism can perceive a recognizable pattern at play. For years, conservatives have been waiting with bated breath for the opportunity to slash what they consider to be a bloated city budget. Now with the shock of the budget crisis and an economic picture that is worsening by the day, the conservative crowd, lead by Mayor Gavin Newsom, has a pretext to offer us their bitter medicine – across the board cuts to vital services and programs that form the safety net for so many San Franciscans. A previously imperfect system is being drastically scaled back leaving people who are already feeling the impact of hard times with nowhere to turn.

Progressives, who have what appears to be a firm hold on the local legislature, are responding with limited success. In order to preserve vital health and human services, it is obvious that the city will need a massive influx of new revenue. But while there is a general acceptance of the idea that cuts cannot be avoided, consensus on new revenue options is a chimerical ideal dangling tenuously and inadequately before our eyes. A proposed June election to vote on tax measures has been delayed indefinitely as Board of Supervisors President David Chiu nobly attempts to reach agreement with politicians who would rather see the poor exported from San Francisco all together.

We are at least half a billion in the red. Even if all the proposed tax measures passed, most of them requiring a two-thirds vote, we will be lucky if we raise $150 million. That’s at least a 3-to-1 ratio of cuts to new revenue. Even with our hard-fought victories in November, this situation has progressive San Francisco on its heels. What will the post-budget crisis landscape look like for progressives if we accept these numbers? We will be struggling to re-open health clinics, rec centers, homeless shelters, and after-school programs for a population of everyday people that may no longer remain. As progressives, we cannot accept the inevitability of cuts without demanding new revenue. In fact we ought to be taking a much a harder line. Absolutely no cuts without a substantial revenue plan.

Well you won’t find any credible revenue plan coming out of the Mayor’s office right now. For a Democratic mayor of the ostensibly liberal bastion of San Francisco, that is a laughably pathetic posture. Gavin Newsom is traipsing around the state of California running for Governor like a Prozac fueled maniac who is wantonly oblivious to the suffering of his constituents. He paints a picture of a little Shangri-la by the Bay while he waves a cleaver over everything that makes this city great. There is just no serious revenue plan in Room 200. The latest suggestions that have trickled out are either vastly irrelevant or positively insulting. One idea is for parking meters on the Marina Green. Another is to ramp up condo conversions. There is no way condo conversions can yield any significant chunk of change for the city without resulting in mass evictions of low and moderate-income tenants. Try again Gavin. Try harder. The Board of Supervisors should refuse to pass a budget until there is support from the Mayor for new tax revenue.

This is a pivotal time not only in the nation’s history but in our city’s history. What will be the legacy of depression-era San Francisco, this progressive stronghold we call home? Look what’s happening on the federal level. With President Obama, we have the most progressive federal budget in history and a commitment to raise taxes on the wealthy and on carbon emitting industry. In the coming years, the federal government will be taxing more and spending more to stimulate the economy, build infrastructure, create jobs, lower health care costs, improve education, and keep people in their homes. What will we be doing in San Francisco? Will we really be accepting deep cuts to our social infrastructure and putting up with insufficient revenue proposals? Will we be unable to figure out how to tax the rich and provide for our people? This would be a tragic result for a city that has so often lead by example.

The sad truth is that we cannot expect Newsom and the conservative bloc on the Board of Supervisors to come around. Reaching out to Republicans in Congress turned out to be an exercise in futility for President Obama. They dug in their heels, stalled, and offered no solutions. San Francisco’s conservatives are using the shock of the budget crisis and the economic situation to ram through an agenda that progressives have held at bay for almost a decade now. As long as we attempt to reach consensus with these folks, we are in a dangerous holding pattern. By the time we finally vote on a series of revenue measures, that may or may not pass, all the serious cuts will have already been made.

Here’s what we’ve got to do:

Enact a Substantial Revenue Plan in Phases

Phase one: We need an election as soon as possible. There is now talk of a July election. A summer election must happen with or without unanimous consent at the Board of Supervisors for every tax measure. Labor and progressives need to gear up every ounce of grass roots machinery they can and seize this moment to pass the tax measures that progressive beacon of hope, John Avalos, is drafting at the Board of Supervisors (sales tax, commercial parcel tax, carbon tax, vehicle impact fee, gross receipts tax, etc…). This includes Labor putting some real pressure on Gubernatorial candidate Newsom to support the tax proposals or suffer the consequences. Hopefully this will raise $150 million in new revenue.

Phase two: come back on the November ballot with a major overhaul of San Francisco’s business tax. Replace the payroll tax with a progressive graduated gross receipts tax, value added tax, or quasi-income tax that brings in an additional $150 million. By the end of the year we could have $300 million in new annual revenue in the budget - Enough that for every dollar we cut, we have at least a dollar in new revenue to add.

Cut from the Top, not the Bottom

Wherever possible, cut administrative and managerial positions and salaries not funding for direct health and human services. $200 million in cuts will still be painful and difficult choices will need to be made but this can be done in a principled and equitable manner. When the economy finally recovers, not only will basic services still more or less be in place, established revenue sources will pick up and allow for an expansion of a progressive vision for the city.

Tap into the Federal Stimulus Money

Our representative in Congress is the Speaker of the House for Christ’s sake. That should put San Francisco first in line for stimulus money. There are myriad ways of tapping into the stimulus funds but here’s one suggestion. Clean energy infrastructure is a major priority for the new President. San Francisco ought to get stimulus funds earmarked for the SFPUC to put solar panels on every school rooftop and every city-owned building in San Francisco. Other clean energy projects should include wind farms and geo-thermal power plants as well as ocean and wave power. We ought to find a way for the SFPUC to sell that renewable energy to city residents and businesses at a discounted rate compared to PG&E. The city makes money while residents and businesses save money.

Imagine that.