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Budget panel amends business-tax measure to free blocked child‑care and homelessness funds and expand small‑business relief
Summary
The San Francisco Budget & Finance Committee on July 16 amended and advanced a Board‑backed business‑tax measure that would unlock voter‑approved child‑care and homelessness funds through a backstop tax, raise the small‑business exemption to $2 million, and phase industry rate increases over several years.
The San Francisco Budget and Finance Committee on July 16 voted to amend and advance a Board‑sponsored business‑tax ballot measure designed to repeal the payroll tax, shift to a gross‑receipts structure and free revenue currently impounded by litigation.
The measure, described by Board President Yee as the "Small Business and Economic Recovery Act," would create a backstop tax that would take effect only if courts strike down two 2018 voter measures. "This measure will free up 300,000,000 for the general funds by placing a back stop tax that only goes into effect if we lose the court cases," President Yee said during the meeting.
Why it matters: Sponsors said the package aims to provide immediate relief to small businesses and targeted relief for industries hit hardest by the pandemic while also restoring access to funds that voters already allocated to child care and homelessness programs but that remain impounded pending litigation.
What changed: Committee amendments increase the small‑business exemption in the Board’s version to $2 million in annual gross receipts (sponsors said that change would exempt roughly 3,100 additional businesses) and expand temporary tax relief to sectors including hospitality, food service, arts and recreation. The amendments also extend the proposed backstop tax from 10 to 20 years and incorporate a charter amendment to exclude revenue from baseline reductions for the backstop feature.
Fiscal effects: City Controller Ben Rosenfield told the committee the backstop would permit the city to spend roughly $1,500,000,000 in the short term—about $1.2 billion that would be dedicated to child‑care and homeless services and roughly $300 million that could be repaid to the general fund. On full phase‑in, Rosenfield said the mayor’s initial proposal would generate about $20,000,000 in ongoing annual general‑fund benefit, while the Board’s amended plan would produce approximately $100,000,000.
Public reaction: Dozens of callers urged supervisors to unlock the impounded child‑care funds. "We worked hard collecting signatures ... Please support the tax for child care," said Maria Luzdor of Parent Voices, representing parents who said affordable care is essential to returning to work. Business groups welcomed increases in exemptions but warned of the risks of additional taxes during a deep recession.
Committee action and next steps: The committee voted to accept the amendments to the Board measure and continued the amended item as a committee report to a special meeting on July 21. Chair Sandra Lee Feaver moved and the roll call recorded ayes (the committee reported three ayes on the recorded roll calls). Chair Feaver also moved to table items 1 and 2 and to file items 4 and 5.
The committee’s action advances the Board’s amended gross‑receipts measure toward a fuller Budget and Finance consideration and eventual placement on the November ballot, but the proposal remains subject to further committee review and to voter approval.
