San Francisco considers tax increases

February 11, 2009 6:48:10 PM PST
Like the country and the state, California's cities and towns are in a financial mess. San Francisco faces its worst budget crisis since The Great Depression and there are choices as difficult as they are unpopular to be made.

SIGN-UP: Get breaking news sent to you

They could raise taxes, cut services, or both. By law, San Francisco has to have a balanced budget. Right now Mayor Gavin Newsom says the city has a deficit of $460 million for the fiscal year that begins in July. So how do they plug that hole? City lawmakers agreed in principal to hold a special election in June.

And so it begins, on Wednesday San Francisco supervisors began debating tax proposals that might be put before city voters in June.

One measure would hike the local sales tax by 0.5 percent for three years, netting $51 million each year. Another would increase the gross receipts tax on businesses, which would generate $72 million annually.

Along upscale Union Street there are signs of the troubled economy, and you're not likely to find support for new taxes. Farzad Arjmand, a San Francisco business owner says business is flat.

"Don't raise anything. Don't raise nothing. Were maxed out," said Arjmand.

The city controller's preliminary report finds the tax measures would provide short term benefit, but in the long haul would cause consumers to shop outside of the city and would drive businesses away.

That's not what supporters of the taxes want to hear. They say city services will be devastated, from recreation centers to health programs for the most vulnerable, if there's no new money.

"We know we cannot do this by cuts alone, unless we are willing to throw out the values of the city of St. Francis," said Debbi Lerman, from the San Francisco Human Services Network.

Mayor Gavin Newsom does not support a June special election. At a summit with Oakland's mayor, Newsom suggested a local economic stimulus package. One component would provide over $23 million in HUD-backed loans at zero percent to local businesses.

"$23 million, that's the first thing we're going to do. The second thing we'll do is advance close to a million dollars in micro loans. Those 5,000 to 10,000 to hundreds and hundreds of other business," said Mayor Newsom.

That plan is not a quick fix as San Francisco struggles with this crisis. More than 400 city workers will lose their jobs on the 20th and the mayor says there will be another wave of layoffs the week after that.

As San Francisco struggles with the crisis, more than 400 city workers will lose their jobs on the 20th. And the mayor says there will be another wave of layoffs the week after that, affecting perhaps as many as 1,000 employees.

       Today's latest headlines | ABC7 News on your phone
Follow us on Twitter | Fan us on Facebook | Get our free widget