Editor’s Notes

Pub date June 17, 2008
WriterTim Redmond

› tredmond@sfbg.com

Ask any elected Democrat in San Francisco about the governor’s budget, and you’ll get an instant answer: it’s awful. It’s brutal. It sucks. Education, housing, the environment … everything we care about is being gutted because the governor and the Republicans in Sacramento won’t raise taxes.

Which is absolutely correct.

Now ask those same Democrats what they think about Mayor Gavin Newsom’s budget. In too many cases, the answer’s a little slower, and a little softer. Gee, it’s too bad that the economy, and Washington and Sacramento and all of these other forces out of our control leave us no choice but to tighten our belts and do things that none of us really wants to do. Gee, Gavin doesn’t like cutting either, but he has to balance the books. Gee, it’s certainly not the mayor’s fault.

Which is absolutely wrong.

The governor of California is not the only chief executive who can look for revenue solutions to a budget shortfall. The mayor of San Francisco can do that too. In fact, Newsom wouldn’t have to look far: Supervisor Aaron Peskin has introduced two measures that together could bring in a minimum of $30 million per year and, in good years, $80 million or more. That’s about a quarter of the budget deficit, enough to save a whole lot of city services, city jobs, and city resources for the needy.

Both tax measures are aimed at the wealthier end of the spectrum. One would raise the transfer tax on real estate sales of more than $2 million. Few first-time homebuyers would see any impact at all, and the ones who do … well, if you can afford a $2 million house, you can pay a reasonable transfer tax. The biggest revenue would come from major downtown commercial property sales: when the Bank of America Building is sold for $1 billion, none of the investors are paupers and the corporations, real estate investment trusts, and financiers involved have all done quite well under the George W. Bush administration’s tax cuts. This is, for the most part, a tax on the rich.

The second measure would eliminate a loophole in the business tax law that allows some partnerships, like law firms, to avoid payroll taxes. See, if you’re a partner in a firm and you earn "profits" in the form of a partnership payout as opposed to a "salary," then the money you make doesn’t get taxed by the city. Most of these outfits are big firms that can afford to pay the city’s business tax. It’s only fair: companies that don’t operate on the partnership model have to pay taxes, and so should everyone else.

The two measures need a vote of the people, and passing any tax is hard. It would help immensely if the mayor endorsed these progressive taxes — and I guarantee that if a Democratic legislator in Sacramento introduced a statewide tax bill hitting the exact same group of people for the exact same amount of money, Newsom and all his Democratic allies would support it (and if the governor vetoed the bill, those same Democrats would denounce him).

The measures would take effect in the middle of the next budget year, and the income could make Newsom’s river of red ink a good bit smaller. He could, in theory, endorse the measures, work for them, and include the revenue in his proposed budget. But so far Peskin hasn’t heard a word from Newsom’s office on this. Neither have I.

Gavin? Hello? *