SFBG Blogs

by Tim Redmond

I’m not kidding. That’s what the numbers right now suggest. San Francisco over the next year could face a budget deficit of $576 million — almost half of the entire discretionary money that the city has to spend.

Mayor Gavin Newsom, frankly, is entirely missing in action on this one. He’s been hiding out, doing his budget discussions in secret, playing Where’s Waldo (even showing up that the board meeting without a budget plan) and leaving City Hall and thousands of city workers, nonprofits and activists wondering what the hell is going on. The lack of leadership is mind boggling.

In the vacuum, the Coalition to Save Public Health has proposed a series of alternative cuts, and Sup. Aaron Peskin, writing in tomorrow’s Bay Guardian, suggests that the board consider them. The proposals include eliminating unnecessary jobs that pay more than $100,000 a year, cutting back the mayor’s seven-person PR staff, cutting the money the city gives to the Opera and Symphony and re-opening the police and fire contracts. These are all good ideas — and they might, in the best of all circumstances, add up to ten or 20 percent of the deficit.

The reality is that the mayor is going to be making some brutal cuts now — and it will be much worse in a few months, when the supervisors have to deal with the next fiscal year’s budget. You can’t cut half a billion dollars out of San Francisco city government without eliminating a lot of essential programs. Public health? Decimated. Parks and Rec? A wreck. Muni? Service will get way worse, fares may go up, and the city’s commitment to public transit will be at risk. What’s the city do for you? Get ready to give it up.

And you think the job market is bad now and the recession starting to hit the city hard? Imagine when a few thousand city employees join the unemployment lines.

So what are we supposed to do? Let me make a suggestion.

The worst thing a government agency can do in a recession is cut spending. The feds can borrow money and keep spending, but the city can’t. So we simply need to face the fact that this is an emergency, a crisis, the worst situation since the 1930s – and we need to look for new revenue.

We can’t mess around with half steps, either. We need big money, right now – and the best, most fair and progressive way to get that is with an income tax.

Now, the city can’t just impose an income tax on residents, the way New York City and Philadelphia do. The California Constitution pre-empts that. But the city CAN levy a tax on all income earned within the city. So the commuters pay, too (although residents who live here and work somewhere else don’t; it’s an imperfect world). Oakland passed a tax on income earned in the city in the 1970s, and the issue went all the way to the state Supreme Court, which ruled in Weekes v. City of Oakland that the tax was perfectly legal (the City Council dropped the tax anyway). Here’s an opinion on it.

The nice thing about income taxes is that they hit the rich harder than the poor. In fact, San Francisco could exempt, say, the first $100.000 of income, then use a progressive scale to make sure that only well-off people paid anything, and the richest paid the most. Even in a recession, there are rich people in this town, people who have done very well under the Bush tax cuts – and shifting money from the rich to the poor during a recession is excellent economics.

And an income tax could actually bring in enough cash to make a real difference.

Of course, the rich people who pay it can deduct the local tax from their state and federal returns – so a lot of the money actually comes to SF from Washington and Sacramento.

Passing something like this would be a huge political challenge – it would have to go on the ballot, and nobody wants new taxes, and the Chamber of Commerce types would howl and raise huge sums to defeat it. It could only work if the entire City Hall establishment, starting with the mayor, was willing to go out and campaign, hard, for the measure. Make it temporary – the tax would expire in two years. Make it progressive – nobody who is hurting financially would pay a heavy burden. And tell the voters: We tax the rich, or we close libraries, and eliminate Muni lines, and take cops off the streets, and close fire stations, and let sick people die because they can’t see doctors – and watch the local economy fall even deeper into recession as city spending plummets.

Because that’s what we’re talking about here. These are the choices.

There’s a good chance the state will have a special election in the spring – a tax measure could go on the ballot then. Or the city could hold its own special election. And if the city income tax doesn’t fly, I’m open to something – anything – else. But is has to be big, and we have to move on it now.

Any takers?