Business groups try to roust SF’s homeless-relief tax

Three different anti-tax and business groups joined forces last week in an attempt to quash Proposition C, San Francisco’s voter-approved measure that taxes some of the city’s richest companies to fund homeless relief efforts.

The Sacramento-based Howard Jarvis Taxpayer Association teamed up with California Business Roundtable, a Sacramento group comprised of executives from large companies throughout the state, and the California Business Properties Association, a commercial real estate advocacy group, to ask the courts that Proposition C be thrown out.

According to a joint statement from the three groups, as noted in the San Francisco Chronicle, the parties believe the city’s homeless tax is unconstitutional because it did not pass with a two-thirds majority vote.

“Prop. C is an illegal tax that violates decades of constitutionally protected taxpayer rights in California,” according to the complaint.

The city insists that, for tax hikes instigated by voter petition instead of by the city itself, only a simple majority vote is needed.

City Attorney Dennis Herrera promoted the 50-percent-plus-one model after a 2017 ruling by the California State Supreme Court.

In that case, California Cannabis Coalition vs City of Upland, the court decided that holding grassroots groups to the same legal standards as city governments was unreasonable:

A contrary conclusion would require an unreasonably broad construction of the term “local government” at the expense of the people’s constitutional right to direct democracy.

[...] As Ulysses once tied himself to the mast so he could resist the Sirens’ tempting song (Homer, The Odyssey, Book XII), voters too can conceivably make the clear and important choice to bind themselves by making it more difficult to enact initiatives in the future.

The electorate made no such clear choice to tie itself to the mast here. Without a direct reference in the text of a provision—or a similarly clear, unambiguous indication that it was within the ambit of a provision’s purpose to constrain the people’s initiative power—we will not construe a provision as imposing such a limitation.

Herrera contends that this same argument exempts citizen initiatives from the two-thirds requirement as well. San Francisco and the Howard Jarvis Taxpayer Association are currently mired in a lawsuit about Herrera’s reading.

The move to torpedo Proposition C is no surprise; No On C backers telegraphed the plan mere hours after the city began tallying votes last November.

Proposition C places an average 0.5 percent gross receipts tax on companies that make more than $50 million in a year. The tax passed with more than 61 percent of the vote.

Fearful of a potential court ruling against Proposition C, the city has thus far decided not to spend any of the money collected.

Last week, the Board of Supervisors passed a law proposed by Mayor London Breed that allows companies to pay into Proposition C voluntarily in exchange for a break on the taxes, hoping to liberate some of the millions for immediate use.