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San Francisco asks companies to voluntarily pay disputed homeless tax

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Mayor London Breed’s plan offers SF’s biggest companies a discount on their tax bill if they punt on court fight

The lobby of Salesforce Tower.
Salesforce is one SF business certain to pay into Mayor London Breed’s plan to secure disputed city revenue.
Photo by Bjorn Bakstad/Shutterstock

The San Francisco Board of Supervisors is asking some of the city’s biggest companies to gamble on the future of the new homeless relief tax, voting in favor of an elaborate plan by Mayor London Breed and Supervisor Vallie Brown to secure potentially millions of dollars in revenue that would otherwise be tied up in court.

In November, voters passed Proposition C, a measure that places an average 0.5 percent gross receipts tax on SF companies that make more than $50 million per year and puts the money toward homeless services.

The tax passed with more than 61 percent of the vote. Before the election, City Hall economist Ted Egan projected it could generate up to $300 million annually.

But the city won’t touch that money right now—and possibly not for years to come. Immediately after the election, the No On C campaign signaled that it will likely sue to have the law nullified.

The Howard Jarvis Taxpayers Association, an anti-tax non-profit based in Sacramento, is suing SF over a similar measure (also called Proposition C), calling it an “illegal special tax” and arguing that it should have needed two-thirds of the vote to pass.

If that suit prevails, it could also open up the homeless tax for similar challenges or scuttle it entirely. Until the city is sure it’s safe, no one will spend the hundreds of millions generated by Prop C for fear of having to refund it later.

Mayor London Breed campaigned against Proposition C in 2018; however, after it passed, she pledged to implement the proposal.

The result was a measure voted up by the board on Tuesday which allows qualifying companies to voluntarily give up potential future refunds on the tax revenue—which the city still collects even though it’s not being spent—in exchange for knocking ten percent off what’s due.

In an emailed statement, Breed acknowledged that it will likely be years before SF is allowed to collect on the bulk of Proposition C funds (assuming it’s allowed to at all), but called Tuesday’s vote “one way to make some of the funding available sooner rather than later.”

The tax plan will require a second vote next week before it passes in full.

It’s not clear how many companies will take City Hall up on the offer, with the notable exception of Salesforce CEO Marc Benioff, who loudly championed Prop C during the election.