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Board rejects proposal for payroll tax credit to encourage hiring of ex‑offenders
Summary
Supervisors debated a voluntary two‑year pilot that would offer up to $10,000 in payroll tax exclusions to businesses that hire formerly incarcerated people. After extended debate about costs, scope and equity, attempts to refer the item to committee failed and the ordinance failed on final vote.
Supervisors debated an ordinance Dec. 6 that would have created a voluntary, two‑year pilot payroll exclusion to encourage private‑sector hiring of people with felony convictions.
Supervisor Ross Mirkarimi framed the measure as a crime‑prevention and reentry tool tied to state realignment (Assembly Bill 109). He described a $10,000 payroll tax exclusion aimed at incentivizing employers to hire ex‑offenders during the first six months after release, noting high local recidivism rates and the city’s fiscal exposure to arrests and incarceration.
Supporters cast the credit as a modest investment compared with jail costs and argued the incentive could reduce recidivism if job placement is timely. Mirkarimi and others pointed to similar programs in other jurisdictions and said the measure was voluntary and limited in duration to evaluate the outcome.
Opponents raised multiple concerns: uncertainty about effectiveness, the potential cost and erosion of the city’s payroll tax base, the difficulty of measuring outcomes and the fairness of singling out one population for tax preferences. Supervisor David Chiu and others said the board lacked sufficient data about takeup rates and long‑term fiscal impacts. Members also cautioned against creating a precedent that would open the payroll tax to requests from many other groups.
Supervisor Mark Farrell moved to send the matter back to committee for more study; Supervisor Jane Kim and others argued the sponsor should proceed to a vote. A motion to refer the measure to committee failed on a 4–7 roll call. The measure then came up for final vote and failed on a 5–6 roll call vote. Several supervisors said they would continue to pursue reentry options through workforce development and nonprofit partnerships rather than a broad tax exclusion.
What this means: The city will not adopt the two‑year payroll exclusion as drafted. Supporters said the issue of reentry employment remains a priority and may be pursued with different tools or pilot programs that do not rely on payroll tax exclusions.
Formal actions: Motion to refer back to committee — Failed, 4 ayes, 7 noes (mover: Supervisor Jane Cohen; second: Supervisor Mark Elsborn). Final vote on item (payroll exclusion) — Failed, 5 ayes, 6 noes.
