N?NNN: Ballot Recommendations (November 2018)

Written by: 
Aubrey Freedman

It’s almost election time again, so these are the LPSF’s recommendations and thoughts on all of this fall’s local ballot measures. As always, the LPSF submitted arguments for the “free” official arguments to be printed in the Voters Handbooks, and we “won” the lottery for two of the ballot measures and submitted two paid arguments, all of which will appear in the Voters Handbooks mailed out in early October. As usual, our support of or opposition to a ballot measure hinges on whether it expands or shrinks the amount of governmental control of our lives. Increased taxes, debt, ordinances, bans, and mandates all tend to be the former, so that’s why the LPSF generally opposes most San Francisco ballot measures. We hope things change some day around here so that we support more ballot measures, but for now, you can count on us to be the loyal opposition!

Prop A (San Francisco Seawall Earthquake Safety Bond). This ballot measure should have been lettered B for Boondoggle. It the voters were to approve this bond, it would be yet another in a long string of government projects destined to have huge cost overruns, take years longer to complete than predicted, and waste mountains of taxpayer money. The Bay Bridge, Central Subway, Transbay Terminal, Oakland Airport Connector, and the granddaddy of them all—the High-Speed Rail. The bond is for $425 million and is a down payment for the estimated total cost of $2-$5 billion. Is it really necessary to spend billions to shore up this wall, which by the way should be called a BAYwall, not a SEAwall, since it is located inside the bay and doesn’t even face the Pacific Ocean? The proponents, as usual, are using scare tactics by making it sound like the whole city will be submerged under water if voters don’t approve the bond. Baloney—it would probably be cheaper to just pump out what little water might flood along the Embarcadero waterfront rather than take on another boondoggle. For that matter, why shouldn’t the property owners who own the waterfront property pay the cost of repairing the BAYwall, since they chose to live there and there’s always some risk when you live close to water? Regardless of one’s thoughts on climate change, our own Starchild (who authored our argument and rebuttal) pointed out how exaggerated the proponents’ claim of sea level rise of 6 feet is by quoting a U.S. Geological Survey that projects sea level rise of just over 2 feet at the most by 2100. That’s a 300% exaggeration rate! Our final word on this is the classic Willie Brown quote which the Department of Elections did not allow us to use his name without his express permission, even though it was printed in the San Francisco Chronicle: “News that the Transbay Terminal is something like $300 million over budget should not come as a shock to anyone. We always knew the initial estimate was way under the real cost. Just like we never had a real cost for the Central Subway or the Bay Bridge…In the world of civic projects, the first budget is really just a down payment. If people knew the real cost from the start, nothing would ever be approved. The idea is to get going. Start digging a hole and make it so big, there’s no alternative to coming up with the money to fill it in.” Need we say more? We recommend a very strong NO on A.

Prop B (Privacy First Policy). This is a charter amendment for The City to adopt a privacy policy regarding The City’s contractors, lessees, grantees, and other third parties receiving permits, licenses, or other entitlements from The City. At first reading, we found this ballot measure to be on the positive side, even if a bit vague, and we were in favor of supporting it. Of course we support more privacy from government and unscrupulous individuals seeking to conduct identity theft. However, subsequent input from the Society of Professional Journalists, which is the official opponent of Prop B, has us rethinking our support because there may be a downside. While all this privacy business is good for private citizens, when it comes to government and those it awards money to with contracts, agreements, leases, and grants, the public deserves to know about those who get taxpayer money. This measure might end up being the opposite of “sunshine” laws that give the public the right to know how its money is being spent. In other words, it may unintentionally lead to the opposite of transparency and disclosure of governmental hanky panky. We have invited the Society of Professional Journalists and also the YES on B campaign to present both sides of the issue to the LPSF at our September 8 meeting, and we will decide our official position afterwards. I rather think now after hearing the downside that we will end up opposing this measure, since we always want to keep an eye on what government is doing with taxpayer money, and who it’s handing it out to, but I could be wrong. Stay tuned for a brief update coming soon.

Prop C (Additional Tax on Gross Receipts for Homelessness). The City already extracts a gross receipts tax on businesses of 0.16%-0.65%, depending on the nature of the business, while companies with gross receipts over $1 billion, a thousand or more employees, and with administrative offices located in San Francisco, pay a payroll tax rate of 1.4% instead. Prop C highlights the greed of the politicians—they already have a gross receipts tax (which the LPSF opposed in 2012), they just pushed through another gross receipts tax on commercial rents “for the children” (early childcare) in June, and now they want a new additional tax. The tax would be paid by the big boys—companies with gross receipts of over $50 billion will be taxed an additional 0.175% -0.69%, and for companies that pay the payroll tax instead, it would be an additional 1.5% of payroll expense. Having surpassed the $10 billion budget milestone last year with nary a shred of shame, this year The City is well on its way to an $11.5 billion budget—and asking the voters for more! Of course, it will be the rich, high-tech companies that need to pay “their fair share” and “give back to the community;” we’ve heard these same platitudes one election after another. As for the proceeds, they’re supposed to go towards ending homelessness in San Francisco. According to the San Francisco Chamber of Commerce, The City spends $382 million each year on homelessness, and yet clearly the problem is worse than ever. Did you read about Mayor Breed’s tour of the city streets to check out the unsanitary conditions with the “Poop Patrol” that are prompting people to start calling The City a slum? We won’t hold our breath waiting for The City to fix the situation, but rewarding such poor results with higher taxes will only enrich the homelessness industry that lives off the taxpayers and the misfortune of others and accomplishes so little. By the way, the LPSF is being attacked by Prop C proponents for being in bed with “corporate interests” by opposing the measure. That shows you how desperate the vested interests are getting since everyone knows the LPSF operates out of principle and is beholden to no one, least of all corporations. We recommend a very strong NO on C.

Prop D (Additional Gross Receipts Tax on Cannabis + Additional Conditions Subjecting Persons to Business Taxes). These two additional extractions are both in addition to current taxes, and since “Gross Receipts Tax” has now become the favorite method of tax collection by City Hall, we might note that this type of tax is based on revenue, not the net income of the business. So, while a company’s revenue might be high, its expenses might also be almost as high, but it will still pay the tax on the higher figure, regardless of its actual evil “profit.” The rates always start low, but once City Hall gets its fangs into your pockets—watch out! There are two parts to this ballot measure, and we question why they aren’t being considered by the voters separately rather than as one lump-sum deal. I guess the politicians figure since it’s a taxing issue, why not just throw in an extra tax for good measure—who will notice? We do.

Part 1 additional tax is to impose an additional tax on cannabis businesses with gross receipts over $1 billion. Such businesses already pay 0.075% to 0.65%, but that just isn’t enough for tax hungry politicians—they want an additional 2.5% for gross receipts from the retail sale of cannabis from $500,000 to $1 million and then 5% above $1 million. For cannabis businesses other than retail sales, the tax rate would be 1% from $500,000 to $1 million and then 1.5% above $1 million. But wait there’s more—the Board of Supervisors can raise the rates up to a maximum of 7%. If you look at the back scenes leading up to the actual ballot measure, it’s not hard to see where this is all headed: some supervisors wanted the rates at 2% and 3% for non-retail cannabis businesses (rather than 1% and 1.5%) and a maximum rate of 10% (rather than 7%). So, the rates will be increased to the max, and it’s just a matter of time, not if. But wasn’t the whole point of legalization to get rid of the black market so folks could actually buy cannabis in a store and know exactly what they’re getting? With outrageous taxes on the product, that would just push the prices higher and send customers back to the black market. While politicians in some states like Washington and Colorado—and even the City of Berkeley—initially set their tax rates too high and pushed buyers back to the black market, they relented and dropped their rates. San Francisco politicians, unfortunately, are moving in the wrong direction with Prop D. Laughably they actually included a phrase that allows them to lower the cannabis tax rates. When was the last time San Francisco politicians voted to lower any tax?

Part 2 of this ballot measure capitalizes on the recent Supreme Court ruling allowing jurisdictions to tax without the need for a physical presence (Nexus rule). Prop D expands the conditions under which anyone doing business in The City would now be subject to San Francisco business taxes if your gross receipts exceed $500,000 (not too hard at San Francisco prices). Well, that didn’t take the politicians long—the ruling was announced on June 21, and by July it was already thrown in this “Cannabis Tax” ballot measure as a special treat for anyone providing goods and services to San Francisco residents. While directed mostly at online purchases so common these days, this could also have a significant effect on even services provided to any company located in The City. As always, all this will only add to the increasing costs of everything in San Francisco. San Francisco didn’t become almost the most expensive city in the country without help from greedy San Francisco politicians. Ronald Reagan must have had our politicians in mind when he said, “If it moves, tax it. If it keeps moving, regulate it. If it stops moving, subsidize it.” We recommend a very strong NO on D.

Prop E (Hotel Tax Allocations to the Arts). The City’s hotel tax rate is currently 14% (8% base tax and 6% tax surcharge) and the taxes go into the General Fund. Prop E would earmark 1.5% of the 8% base tax to “arts and cultural purposes,” such as nonprofit cultural organizations, the Arts Commission, Cultural Districts, and “needs in the arts community.” In other words, special interests. Because this ballot measure is revenue neutral (hotel visitors will continue to pay the same 14%), the LPSF considered not submitting an argument against this one, but our core members felt strongly that earmarking for special interests reduces funding for basic services and, more important, why is The City even funding the arts at all, so we did submit an argument against Prop E. Even the City Controller notes in his analysis that The City already allocates out of the General Fund around $22 million/year, so the arts are already getting significant government funding. The additional allocation would have to come out of basic services the residents rely on. We have an issue with government funding of any art at all—let alone $22 million plus an additional $5 million the first year and an additional $13 million in subsequent years. Why should government bureaucrats be picking and choosing the “winners” for cultural events? Residents and visitors already can and do “vote” with their hard-earned money by choosing performances, movies, and museums that they prefer. If not enough individuals support that artist or group of artists, then probably that “art” shouldn’t exist—at least commercially. Why should visitors to The City be forced to pay for art they may not even care for? While it’s obvious that government funding of the arts is a sacred cow in this city since it’s been around for decades, we find it amusing that Prop E proponents claim that “San Francisco arts help attract tourists here.” In fact, I’ve heard just the opposite from visitors I’ve hosted here who remarked that San Francisco is no cultural mecca and it’s The City’s awesome geography and restaurants that are the main attractions. If anything, government funding lowers the bar for the striving of artistic creativity and excellence because once the organization gets approved for “grants,” it gets funded year after year whether it produces anything of value or not. In the marketplace of arts, if the “customers” aren’t happy with the artist’s latest work, his or her pocketbook will suffer. Success should not be guaranteed for any special individual or group of individuals—including artists. Therefore, we recommend a strong NO vote E.

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