Boom for whom?

Why isn't San Francisco's hot economy creating a budget surplus to address its costly byproducts?

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Workers rally at City Hall for an end to corporate welfare programs.
GUARDIAN PHOTO BY JOE FITZGERALD RODRIGUEZ

steve@sfbg.com, joe@sfbg.com

San Francisco's economy is booming these days, fueled by the latest dot-com bubble and a hot real estate market, sending more than expected tax revenue into city coffers. So why doesn't San Francisco have a big budget surplus to help address the gentrification and displacement triggered by the boom?

The lack of satisfying answers to that question is adding to the populist political outrage that is now animating the city, from the regular street protests against evictions and rising income inequality to the corridors of City Hall, where labors leaders and progressive activists are calling for a repeal of the corporate welfare policies adopted by the Mayor's Office.

The city's charter-mandated, biannual Five Year Financial Plan Update, released March 6, shows projected annual city budget deficits growing steadily from $66.7 million in 2014-15 to $339.4 million in 2017-18, demonstrating that even the hottest of economies can't overcome the city's structural budget deficit.

Revenues are indeed growing, but not nearly as fast as the cost of running the city, a mismatch that has only been exacerbated by tens of millions of dollars in tax breaks given to Twitter and other growing companies along mid-Market Street and those that offer stock options.

Changing the business tax from a payroll to gross receipts tax also failed to address that structural deficit, and it may have even exacerbated it, particularly for the big tech firms that came out ahead in the switch. Bottom line: The city isn't bringing in enough revenue to balance its bottom line, even in good years.

Last week, members and allies of the largest city employee union, Service Employees International Union Local 1021, stormed through City Hall demanding its share of the city's wealth, promising to return this week when a delayed Board of Supervisors Budget and Finance Committee hearing will finally be held.

This year's city budget process could emerge as a key narrative in the tale of two San Franciscos that is being told here and by watchers around the world.

 

ENOUGH IS ENOUGH

Nearly 300 SEIU members and their supporters protested the business tax breaks on the steps of City Hall on March 19, in advance of the scheduled budget hearing inside. Their chants took a unique twist on a familiar theme.

"Whose city?!" Sup. David Campos asked the crowd. "Everyone's city!" they shouted back.

And that's the rub. It's not about excluding tech and corporations from San Francisco, the protesters said, it's about fairness.

"There's a great deal of wealth in San Francisco, and it's wealth that leaves behind many of us," Campos told the crowd of purple-clad protesters. "It's time to put working people in front of the line."

The giveaways to corporations and the tech industry are at a breaking point, the protesters said. Twitter alone is getting an estimated $56 million tax break, with millions more going to the companies in its orbit. The Google buses are only paying a dollar per stop, bringing in budgetary decimal dust from a corporation worth $390 billion. City taxpayers paid $5.5 million to subsidize Oracle CEO Larry Ellison's America's Cup last summer.

The numbers are adding up, and the union workers were asking how the city can give away hundreds of millions of dollars to the wealthy tech industry while the city struggles to provide basic services while bridging budget deficits. Mayor Ed Lee and his allies emphasize his economic policies stimulate the economy and create jobs, but the workers say that's only increasing the cost of living here.

"I have a family of five and I couldn't afford to stay here," said Brandon Dawkins, an employee in the Department of Public Health. "I was born and raised in San Francisco and we had to move to Oakland. And now that's expensive and we're going to have to go to Sacramento and I'll commute here for work."

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