On Tuesday/12, activists, organizers and workers from community-based groups in San Francisco will deliver 1,000 personal postcards to Mayor Daniel Lurie. They group will arrive at City Hall around 11:30. The postcards will tell the mayor the human costs of his brutal budget cuts.
Lurie might send someone out to get the cards, but it’s unlikely he or the majority on the Board of Supes will make many changes: The mayor is determined to eliminate jobs, programs, and nonprofit services.
The message he has sent, over and over, is the same message we hear from the school superintendent, the chancellor of City College, and so many local officials: We just don’t have the money.
This is not necessarily true, and there’s a simple solution that might solve the crisis.
San Francisco is one of the richest cities in the history of civilization. The number of people with fortunes of more than $50 million is staggering. All of them have made even more money under the Trump Administration, which has cut taxes on the very rich.
Progressives have fought, and often won, battles for higher transfer taxes on mansions and big office buildings, and on the largest corporations in town, and now, maybe, on companies that have more than 1,000 employees, revenues of more than $1 billion, and CEOs who make more than 100 times what the median worker makes.
(I got a mailer today that said Prop. D would hurt “grocery stores and pharmacies.” Sounds awful, except that the only “grocery stores” that might be impacted would be Whole Foods, owned by Amazon, and Safeway, and the only “pharmacies” would be Walgreens Corp. No small businesses will pay an extra penny.)
These are all positive ways to tax the rich, but the best way to do that is with a progressive income tax or a wealth tax. The state’s voters might go for a wealth tax on billionaires in the fall, which would set a national precedent.
I’m not a lawyer, but I think there’s also a credible legal argument that San Francisco could replace taxes on small business, high Muni fares, and regressive sales taxes, and solve the budget crisis right now—with a city income tax on the one percent.
Most politicians say that state law prevents cities from passing local income taxes. That’s not exactly true.
The late Buck Delventhal, who was the expert on local and state law for the City Attorney’s Office for decades, told me years ago that the controlling law on local income taxes was a case called Weekes v. City of Oakland, decided by the state Supreme Court in 1978.
The history: In the 1970s, Oakland had a lot of industry (Kaiser and Clorox, among others) and a lot of commuters coming to work in a city that paid for the services they used. The commuters paid little in the way of local taxes.
So the City Council passed what some called a “commuter tax,” but was actually a modest tax on income earned in the city. If you worked in Oakland, you paid a tax on your earnings, no matter where you lived.
A taxpayer named Bersford David Weekes sued, saying that state law banned local income taxes. The case went all the way to the state Supreme Court.
The Oakland city attorney, David Self, made two arguments: The tax in question was not an income tax because it was based on where you work, not where you live—and even if it were an income tax, under the home rule provisions of the state Constitution, cities have the right to tax income.
The Court agreed with the first argument; a tax on income earned in a city is perfectly legal. Then:
We conclude that the fee is what it purports to be, namely, an occupation tax substantially resembling the type of municipal license fee long approved by us and expressly authorized by the final paragraph of section 17041.5. In view of our conclusion in this regard, we need not, and do not, reach the further question whether the Legislature is prevented by the home rule provision of the California Constitution from imposing an absolute ban upon revenue-raising measures of this nature enacted by chartered cities.
In a concurring opinion, Justice Frank Richardson noted:
Although the case properly may be disposed of on the basis that the Oakland license tax is not an income tax, I would uphold the tax upon the additional ground that, in any event, the Legislature lacks power to proscribe municipal income taxes. I would reach and resolve the constitutional issue which the parties have raised in view of the unquestionable importance of this matter to numerous California cities. … As we stated many years ago, “it has always been conceded … that the object of the [1896 amendment and its successors] … was to secure to the municipality that had, under the provisions of the constitution, adopted a charter for its own government, the maintenance of its charter provisions in municipal matters, and to deprive the legislature of the power, by laws general in form, to interfere in the government and management of the municipality.”
Then Oakland, under a different City Council, repealed the tax, making the decision moot, and it’s never come up again. The current Supreme Court has never addressed the issue. So Weekes remains the law in the state of California.
That means San Francisco could, right now, pass a tax on income earned in the city. A decade ago, that would be very unfair: Many of the people who made the most money lived here, but worked in Silicon Valley and wouldn’t pay the tax. But today, the AI boom is based in San Francisco, and many of the very-high-paid workers are employed in this city.
The voters could impose a tax that exempted, say, the first $500,000 (pick a number) of income, and taxed the very high earners at a progressive rate. Just taxing the highest paid 5,000 at the amount they have saved under Trump would bring in close to $1 billion over two years, according to IRS data. No more budget deficit. Move that to the top 10,000 earners, all of them very rich, and there’s money for the schools, City College, all the social programs the city needs … and 99 percent of city residents wouldn’t pay a penny.
In fact, we could cut taxes and fees for the vast majority of residents, and businesses and make the business tax code a lot more simple. Cut parking meter rates, and tickets for street cleaning, and permit costs for small businesses and, all the other annoying things the city has to do to keep the system running.
Let’s take it a step further: If Justice Richardson is right, the city can legally impose an income tax on residents, based on home rule (which in essence says that any policy that impacts only the residents of a charter city is none of the state’s business). New York has a city income tax. So does Philly. One of Mayor Mamdani’s goals is to hike that tax on the very rich, to pay for affordable housing, child care, schools, and other services. Again: tax only the rich. Would all of them leave the city? Unlikely, since it would be a pittance to them, and they could deduct the cost of a local tax from their federal income taxes.
A city income tax, just on the very rich, would get challenged in court instantly. If San Francisco could do it, so could LA, and who knows where taxing the rich might end? Maybe the current Supreme Court would overturn Weekes.
But if the 1978 case stands up, the impact could be transformational. We will never find out unless we try.
The Budget Committee will consider Wednesday/13 a proposal to loan the San Francisco Zoological Society $8.5 million to stabilize finances at the city zoo.
The place is a mess, and has been that way for years. It’s too bad: A few of the features, like the Lemur exhibit, are cool, and those animals seem to be happy, but most of it is just sad. That’s the result of decades of privatization: Nobody is accountable for the failures, since the city just lets the Zoological Society run things until the finances get so bad that the taxpayers have to bail them out.
It’s not as if the zoo were cheap, either: On weekends, it’s $31 for adult admission and $22 for kids. Family of four: $106. For what’s supposed to be a public facility, on public land.
And that’s if you don’t pay for parking, and you don’t eat any of the bad, overpriced food at the Leaping Lemur Cafe. Or buy a hot dog for your kid at the outdoor stand, where the seagulls routinely swoop down and snatch the food right of the kids’ hands.
If the city is going to bail out the Zoological Society, why not consider ending the contract and giving the zoo back to Rec-Park, which ran it for like 100 years, and where at least someone has to take public responsibility on a regular basis?
That hearing starts at 10 am.
The Budget and Appropriations Committee also meets Wednesday/13 and will start hearing the proposed budgets for city departments. Up this week, among others: the Department of the Environment, which the mayor has proposed to cut by 80 percent. At a time when the world is being rocked by climate crises, San Francisco would in effect have not Department of the Environment, and no way to even imagine implementing any of the climate plan that the department so carefully prepared.
At a hearing back in February, the supes seemed dubious about these cuts. Let’s see how they react this week. That hearing starts at 1:30pm.
Gabe Greschler at the Standard dropped this bombshell about PG&E knowing a substation was faulty before the last blackout comes right in time for the Public Safety and Neighborhood Services Committee’s hearing on power outages.
From the Standard:
the multibillion-dollar company was aware of damage at the Mission substation responsible for the incident but left faulty equipment in place.
That’s a different story than PG&E’s CEO told the supes last time he appeared, when he said it was a freak accident.
I don’t know why the city is still waiting for a CPUC report that may never get done. I wonder if anyone on that committee will call on the city attorney to immediately start eminent domain proceedings to take over a system that the private utility clearly can’t maintain at an adequate level.
Last week, Sup. Matt Dorsey didn’t have the votes for his measure mandating that all city-funded permanent supportive housing be drug free, meaning people who relapse from treatment could be evicted and sent back to the streets. It comes back to the full board Tuesday/12. That meeting starts at 2pm.
