On City Budget, Which Side is Newsom On?

by Paul Hogarth on February 9, 2009

In Washington and Sacramento, Republicans are obstructing the federal stimulus package and state budget – while Democrats attempt solutions. In San Francisco, Mayor Gavin Newsom has vetoed a June special election (i.e., the only way the City can raise revenue), while proposing only budget cuts and give backs from unions. He told yesterday’s Chronicle that he’s “outlining a budget,” but so far has rebuffed any realistic effort to raise revenue. And as Supervisor Bevan Dufty said last week, our half-a-billion dollar deficit cannot be fixed without a comprehensive solution. Employees won’t give back raises if we’re not serious about revenue, and balancing the budget on cuts alone will prove devastating. Now is not the time to be a knee-jerk opponent of “new taxes”; Newsom must lead to get the City out of its mess, or else face a disaster. Instead, he’ll be hosting town halls this week in Stockton and San Jose – to boost his sagging gubernatorial ambitions. Newsom says he’s a Democrat; but when it comes to handling our worst fiscal crisis since the Great Depression, he’s acting a lot like a Republican.

In the U.S. Congress, Republicans are taking their cues from Rush Limbaugh when it comes to a federal stimulus package. Not a single GOP member in the House voted for it, and only a handful of “moderates” in the Senate will support it because President Obama has removed housing assistance for the poor. In the California legislature, Republicans continue to abuse the “two-thirds” rule by refusing to vote for a single budget that has any tax increase whatsoever – unless Democrats agree to a draconian spending cap, and roll back the state’s basic labor and environmental protections.

There’s a word for people like that – obstructionists – and their conduct during this crisis is nothing short of reprehensible. Most San Franciscans agree, including Mayor Gavin Newsom – who said the following last July about the Sacramento budget stand-off: “the whole thing’s absurd … It’s a tyranny of the minority … It’s an embarrassment.”

So why did the Mayor veto a June special election at 5:00 p.m. last Friday, although it’s the only way for the City to raise revenue (and pass budget reforms around set-asides)?

Newsom may be right when he says a two-thirds majority of voters won’t approve tax increases in June, and we need to build a wider coalition to ensure passage. But we don’t have the luxury of time to wait past June 2nd. The city will face a $576 million deficit on June 30th – which would mean slashing half the General Fund without a special election.

While he vetoes a June election, how does Newsom propose filling the gap? On February 4th, his Deputy Budget Director introduced a plan to the Board’s Budget Committee that would make Ronald Reagan proud: (a) proceed with $115 million in mid-year cuts done without consulting the Board of Supervisors; (b) ask the City labor unions to give back $90 million in contracts; (c) dip $49 million into the Rainy Day Fund; and (d) cut 12.5% out of every City Department – including $50 million out of Public Health.

Even if we do this, the Mayor’s Office admits we’ll still have a $177 million gap. How does Newsom propose to fill that gap? Ask the City Departments to cut another 12.5% (or a total of $100 million out of Public Health), and “other revenue solutions.”

What “other revenue solutions” does Newsom have? So far, he’s only proposed allowing tenancies-in-common (TIC’s) that once housed evicted tenants to mass convert into condominiums – by lifting the cap on conversions and charging a higher fee. Besides being a horrible idea, it also would require a vote of the people. So why not go ahead with a special election, and see if the electorate would rather tax downtown businesses than cannibalize our rental housing stock by rewarding real estate speculators?

Just like the Republicans in Sacramento, Newsom is proposing a budget solution that is “cut, cut, cut” in a way that hits poor people the most – without also suggesting sensible way to raise revenue. I wish we didn’t need to call a special election and have two-thirds of the voters approve taxes, but San Francisco’s fiscal straitjacket (imposed by Propositions 13 and 218) unfortunately requires us to do so.

And as Supervisor Bevan Dufty noted last week, our deficit is simply too daunting to avoid raising some taxes. We need a “three-part approach”: (a) give-backs from the unions, (b) raising revenues, and (c) cuts. All must happen in order to fill a $576 million gap. Just like we can’t simply tax ourselves out of this problem, revenue measures are essential at convincing the City’s unions that we’re not asking them to unilaterally fix the problem alone. They won’t “give back” part of their contract agreements otherwise.

Everyone acknowledges we need budget cuts, and they will be painful. But sometimes the choices in local government are between an unmitigated disaster – and just a regular disaster. Without the voters raising taxes, the City will face an unmitigated disaster.

Newsom’s veto won’t stop a June special election – there are eight votes at the Board of Supervisors to override him. So the practical effect of his veto was to simply play “naysayer,” as he leaves town (again!) to campaign for Governor. This week, Newsom will be going to Stockton and San Jose to hold “town hall” forums – with Santa Cruz next week and Truckee on February 26th.

How does the Mayor plan to get elected Governor? By touting San Francisco’s universal health care plan? Without some tax proposals, these budget cuts will slash $100 million out of the Health Department – jeopardizing hope for the City to implement it. Gay marriage? Newsom engendered a lot of good will for his bold stance on marriage equality, but Prop 8 exposed a crucial weakness – his inability to engage those he disagrees with.

Newsom needs to work with the Board of Supervisors to come up with a solution. He must use his considerable weight in the business community to persuade them that tax increases are inevitable (expanding the coalition we need to make a June special election successful.) Only then will he persuade me that he wants to act like a Democrat.

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