San Francisco subcommittee accepts technical fixes, continues competing gross‑receipts tax measures to July 18

The Budget and Finance Subcommittee of the San Francisco Board of Supervisors accepted a package of technical corrections to two competing charter amendments that would shift portions of the city's payroll tax toward a gross‑receipts tax and agreed — without recorded roll‑call votes — to continue both items to Wednesday, July 18.

The measures, read into the record at the special meeting, would enact a new Article 12A‑1 to impose gross receipts and gross expense taxes, amend Article 12A to reduce payroll expense taxes based on gross receipts collected, and establish business registration fees scaled to gross receipts and gross expenses. The two versions presented to the committee differed in projected additional revenue from adjusted registration fees: one cited $13,000,000 and the other $40,000,000.

Controller Ben Rosenfield summarized the committee's one‑page amendments, saying the changes fall into three groups: "clean up language, correct typos, clarify definitions," an accelerated schedule for higher license fees (first payable in FY13‑14 rather than FY14‑15) and fixes to a flawed phase‑in formula. On the administrative‑office test he said the revisions now require both a 50 percent payroll test and thresholds for large firms: "US receipts of over $1,000,000,000 and over 1,000 employees," and noted stock‑based compensation is excluded from the 50 percent payroll calculation. He also told the committee the revisions clarify that an "individual managing their own funds alone is not deemed a taxpayer."

Supporters and business representatives urged care in crafting a revenue‑neutral structure. Jim Lazarus of the San Francisco Chamber of Commerce said the group has "consistently supported an outcome where we tax revenues and not job creation" and called for a broadly fair outcome for businesses of all sizes. Vice Chair Supervisor Avalos emphasized that businesses with revenue below $1 million would be exempt under the proposals he co‑sponsored.

Supervisor Kim moved to amend Item 2 to reinsert existing exclusion language — the sections discussed as 9.60 and 9.61 in the mayor's and President Chu's versions — covering mid‑market, Tenderloin and biotech exemptions so the two charter amendments contain identical exclusion language. Kim said she would work with the controller and city attorney to ensure the language is uniform. Several colleagues, including Avalos, said they would accept the amendment to help forge consensus toward a single ballot measure.

The committee took three motions related to the two measures without objection: (1) to accept the controller's technical amendments to both items as amendment of the whole (moved by Supervisor Avalos); (2) to insert the referenced sections (9.60 and 9.61) into Item 2 to match Item 1 (moved by Supervisor Kim); and (3) to continue the two amended items to Wednesday, July 18 for fuller presentation and deliberation. The clerk noted items acted upon would appear on the Board of Supervisors agenda on July 24, 2012. No roll‑call vote tallies were recorded in the transcript.

What happens next: staff from the controller and the city attorney will finalize uniform language and corrections ahead of the continued hearing. The committee scheduled the fuller discussion and possible further amendments for the July 18 committee session, with the items slated to appear on the full Board agenda July 24.