Rules Committee narrows charter change so backstop business tax won’t increase baseline allocations

Supervisor Hillary Ronan, chair of the San Francisco Board of Supervisors Rules Committee, presided over a special remote meeting where the committee adopted amendments narrowing a proposed charter change that would exclude a potential "backstop" business tax from future baseline funding calculations.

The move followed a presentation by Controller Ben Rosenfeld, who said the city is in litigation over two voter-approved dedicated business taxes and that the proposed backstop tax in two November ballot measures would serve as an alternative revenue stream if courts require refunds. "We're collecting $450,000,000 a year roughly in these two taxes that we will have to refund if the courts rule against the city," Rosenfeld said, arguing that excluding the backstop tax from baseline calculations would preserve revenue available to pay refunds and support homelessness and child-care services.

Why it matters: Charter-mandated baseline allocations determine how much recurring revenue is set aside for voter-specified funds. Rosenfeld warned that, absent the narrowing amendment, the backstop—if treated as a general tax—would contribute to voter-adopted baseline calculations and reduce the amount available to repay potential refunds or to fund ongoing programs. He estimated roughly $100,000,000 of the roughly $450,000,000 would otherwise count toward baseline purposes under baseline-calculation rules.

The committee voted on Supervisor Catherine Stephanie’s motion to adopt Rosenfeld’s amendments. The roll call recorded 'aye' votes from Supervisor Catherine Stephanie, Supervisor Gordon Marr and Chair Hillary Ronan; the motion passed without objection. Members then voted to continue the underlying measure as amended to the call of the chair, which preserves the committee’s ability to re-hear the charter amendment before sending it to the full Board of Supervisors.

The amendment as described would limit the charter change so it applies only to the backstop tax feature and not to other taxes or other features of the two business-tax measures. Rosenfeld said that narrowing would "preserve the value of that tax to pay for court-ordered refunds in childcare and homeless services." Chair Ronan said, "I think this makes a lot of sense, and the amendments certainly make me feel a lot more comfortable."

Next steps: Because an amended charter measure must be re-heard, the committee continued the matter to the call of the chair; clerk Victor Young said items acted upon today are expected to appear on the Board of Supervisors agenda of July 7 unless otherwise stated. No final Board vote on the charter amendment occurred at this meeting.