As cities and nations push austerity measures in the face of a sagging economy, San Francisco proved again this week that it is going in a different direction. Two November ballot measures to stimulate the local economy -- one creates San Francisco’s first affordable housing trust fund, the other changes the city’s business taxes from payroll to gross receipts -- both passed the Board of Supervisors with broad support. The Board also gave final approval to a two-year city budget that promotes investment in jobs and neighborhoods and avoids public sector layoffs and service reductions. These actions, along with November ballot measures to boost funding for parks, recreation centers and City College, promote investment, not austerity. San Francisco is a national model for the type of progressive economic stimulus policies that Republicans and “Blue Dog” Democrats have prevented from lifting the economy elsewhere.
This has been a remarkable political week in San Francisco for two reasons.
First, there is broad citywide support for two ballot measures that were politically off-limits as recently as the Newsom Administration: an affordable housing trust fund and a new system for collecting business taxes that also increases city revenue by $28.5 million annually ($13 million is earmarked for affordable housing).
Second, this broad support was produced without any of the public acrimony that killed such sweeping proposals in the past. Mayor Lee’s “consensus” governing style -- which critics said would never work on tough issues -- deserves much of the credit, as does Supervisors Avalos and Chiu’s willingness to work closely with their rival in last fall’s mayoral race.
Trust Fund an Historic Goal
San Francisco housing activists have sought a permanent source of affordable housing funding for over thirty years. Historically, the city has used CDBG funds rather than general fund dollars for affordable housing, and starting in the Willie Brown administration Redevelopment Agency money became the chief source for nonprofit housers. Brown’s backing of a $100 million affordable housing bond in 1996 was the last time a mayor spent political capital on the issue -- until Mayor Ed Lee.
Without affordable housing construction being a top mayoral priority, forming a broad coalition to move on the issue was politically infeasible. Real estate interests either opposed, or were not supportive of, affordable housing funded by city bonds, and the idea of using general fund revenue for housing remained off the table.
The Lee Administration won broad support for a housing trust fund by addressing market-rate developers and real estate interests longstanding concerns about the city’s network of housing construction policies. This was the first time since 1996 that these interests were seriously brought into the process from the outset. The result is that the Trust Fund measure includes critical housing policy components in addition to an ongoing funding source.
With the federal government abandoning its commitment to affordable housing construction and California lacking funds, the Trust Fund will be the city’s main strategy for housing low-income families. It also represents an ongoing source of blue-collar jobs, further helping to reduce San Francisco’s already lower than average unemployment rate.
Revenue-Raising Business Tax Reform
As Republican-controlled state and local governments continue to cut taxes and reduce public services, San Francisco is going in the opposite direction. The payroll tax reform measure approved this week will bring $28.5 million in new annual revenue plus a more progressive business tax system.
I argued in May
that even a revenue neutral business tax reform measure deserved progressive support because taxing payrolls rather than gross receipts is regressive. My colleague Paul Hogarth agreed, and highlighted past progressive election failures
in trying to raise taxes against strong business opposition.
But thanks to Mayor Lee and John Avalos’ leadership on this issue, progressives have gained a more progressive tax structure and more revenue.
The Lee-Avalos working relationship may be unprecedented in recent San Francisco history. When you consider prior working relationships between mayors and the Board candidate who was their closest election challenger -- Feinstein-Kopp, Agnos-Molinari, Jordan-Alioto, Brown-Ammiano, and Newsom-Gonzalez—none comes close to bringing the results for the city as has Lee-Avalos.
A National Model
San Francisco’s adoption of progressive, socially beneficial measures backed by the business community shows what could have happened nationally absent Republican and “Blue Dog” Democrat obstructionism. It also shows the enormous political support for measures that directly create jobs.
From his appointment as interim mayor through today, Mayor Ed Lee has insisted that creating jobs was his top priority. He joked at his January 2012 inauguration that the media found his single-minded focus on jobs to be “boring,” but has not deviated from this course.
In contrast, President Barack Obama shifted from jobs to prioritizing deficit reduction in 2010, perhaps the worst mistake of his presidency. There’s a reason Obama has stuck to the jobs focus throughout 2012 — he knows it’s the key to winning in November.
San Francisco has long been the national forerunner on progressive issues like city-required paid sick leave, AIDS funding, and land use controls protecting SRO’s and other low-cost housing. Now it’s also a national model for public investment and socially responsible job creation.