Debate over $185 million windfall begins this week

Mayor, supes have some competing priorities for money from education fund. Plus a vacancy tax -- and why we need it. That's The Agenda for Feb. 4-11.

The debate over how to spend a $185 million windfall that the city just received begins at the Board of Supes Wednesday/6 when the Budget and Finance committee takes up a competing pair of proposals.

Mayor London Breed wants to allocate all of the money for homeless services and affordable housing. The coalition that promoted Prop. C, which raises taxes on the city’s biggest and richest businesses, also supports that idea.

The mayor wants the windfall to go entirely to homeless programs and housing; others have competing priorities.

(Prop. C will be tied up in the courts for a while because it didn’t get two-thirds of the vote. Breed’s active opposition to the measure may well have cost Prop. C its unassailable majority.)

From the Our City Our Home statement:

The Prop C priorities (approved by San Francisco voters) of funding homelessness services as well as other pressing civic needs cannot wait. The influx of increased ERAF funding could provide housing, mental health care and drug addiction services, contribute to clean and healthy streets, prevent additional homelessness, and move youth, women, seniors, and families with young children off of the streets and into supportive and affordable homes.

Four supervisors have a slightly different proposal. Sups. Aaron Peskin, Rafael Mandelman, Sandra Lee Fewer, Gordon Mar,and Norman Yee want to allocate $20 million to pay raises for early-education teachers, $13 million to the school district for teacher pay increases, and $15.6 million to the SF Public Utilities Commission to begin acquiring public-power infrastructure.

The money comes from a property-tax fund for public schools. When the city’s property taxes are higher than expected, and the schools are “fully funded” according to the state, then the city gets the money back for its General Fund.

The so-called Educational Revenue Augmentation Fund is loaded with money thanks to higher-than-expected property tax revenue. In fact, according to the Controller’s Office, the city could be getting another $200 million in 2019.

The teacher’s union argues that the money was originally designed to fund education – and that the schools may have met the funding level required by the state, but it’s still way too low.

Proposition G, which passed in June 2018, gives teachers a 7 percent wage increase – but that, too, is stalled in the courts. The district has enough reserve money to cover the pay hike for this year. But “the teachers expect the board to allocate enough money here and now to pay for next year and the following year,” union activist Ken Tray told me. The $13 million on the table isn’t enough, and the union will be asking for significantly more.

(And I don’t think the teachers are happy that Breed is pitting them against homeless people.)

Both the mayor’s plan and the supes’ alternative contain language saying that the General Fund will be repaid if Props. C and G are upheld in court.

Sup. Hillary Ronen told me she supports giving more money to the teachers, and that the supes and various constituent groups will be meeting in the next few days to try to work out what the supes’s final alternative will look like.

Whatever it is, it won’t be exactly what the mayor wants, setting up the first major conflict between Breed and the new progressive board.

The Land Use and Transportation Committee meets Monday/4 to consider and vote on a tax on vacant storefronts – and it’s clearly a winner. All 11 supes are co-sponsors.

The measure is an attempt to go after landlords who are holding property off the market in the hope that the rents will go even higher – the perverse impacts of the tech boom, spreading all over town.

It’s driven property values up so high that we are losing community institutions – Lucca’s on Valencia, which has been in operation since 1925, is closing so the family that owns it can sell the building for millions.

The tax on vacant buildings may help some small businesses get leases. But let’s not forget that the Twitter Tax break and the policies associated with it have devastated the city.

And I am still waiting for any of the people who supported that policy to say they made a mistake.