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Committee approves payroll‑tax exclusion to incentivize hiring recently released felony‑convicted workers, amended to a 3‑year window
Summary
The Budget & Finance Committee recommended forwarding an ordinance creating a one‑time payroll‑expense tax exclusion (roughly $10,000 per hire) to incentivize hiring people with felony convictions; the committee amended the definition of eligible hires to those released within the previous three years and recommended the ordinance forward on a 2‑year sunset, with a recorded roll‑call (Mercury Aye; Kim Aye; Chu No).
The Budget & Finance Committee on Dec. 6 voted to recommend an ordinance that would create a payroll‑expense tax exclusion to encourage employers to hire people with felony convictions. The credit was described in committee testimony as roughly a $10,000 one‑time payroll‑tax benefit per qualified full‑time hire (equivalent to excluding $675,000 of payroll subject to the 1.5% payroll tax calculation used in the ordinance).
Sponsor Supervisor Mercury framed the proposal as a public‑safety and recidivism‑reduction tool, noting high local recidivism rates and projected increases in population under probation or supervision following state realignment. Public Defender Jeff Adachi and numerous reentry and workforce groups testified in support, urging that the incentive be paired with bonding, training and prioritization for recently released people. Agency representatives (Sheriff, Adult Probation, Reentry Council, Goodwill and others) supported the measure as a workforce incentive that can reduce reoffending.
Budget staff explained the per‑hire payroll‑tax reduction (approximately $10,001.25 for a full‑time hire) and said the city could not estimate the overall revenue loss because the number of hires that would qualify is unknown. The Treasurer and Small Business Commission stressed outreach and IT changes would be necessary to implement the exclusion; the Treasurer estimated one‑time costs for payroll‑tax document revisions (~$150,000).
During public comment and member discussion committee members raised concerns about eligibility scope and promoting long‑term retention. Public Defender Adachi recommended prioritizing recently released people; Supervisor Kim asked for a defined window. The committee adopted a non‑substantive amendment to define a “qualified ex‑felon” as someone convicted and released within the last three years. Deputy City Attorney Cheryl Adams said the change is definitional and does not require continuance. The committee then voted to recommend the ordinance as amended. On the roll call, Supervisors Mercury and Kim voted aye; Chair Carmen Chu voted no; the motion passed.
