EDITORIAL On Oct. 21, a string of economists and advisors from the Newsom administration, the Chamber of Commerce, and the Convention and Visitors Bureau appeared before the San Francisco Board of Supervisors to present a picture of the local economy that was stunning in its lack of reality.
The experts talked about how San Francisco isn't really hurting that much right now. They said the downturn would hit eventually, but that housing and jobs are still relatively strong here. And what we need to do to boost the economy, the mayor and his experts said, is to promote downtown business, cut fees and further reduce the city budget.
Cut taxes? Cut spending? Boost big business? That sounds a lot like the economic prescriptions we've been hearing from the right wing of the Republican Party for decades. And it hasn't exactly worked out well.
In fact, for many San Franciscans, the recession is already here and is deep and painful. Small businesses are struggling. People are losing jobs and finding it hard to pay the rent. Like Washington, DC, San Francisco needs to be taking this seriously but what we've seen from Mayor Gavin Newsom is a bunch of hot air. The mayor wants to accelerate capital spending. Fine. But he's counting on projects like rebuilding Airport Terminal Two that rely on bond sales and this isn't a great time to be selling bonds and that create jobs mostly for big out-of-town construction firms. And he wants to cut fees on business which has never proven to be an economic stimulus, but would require deeper cuts in city programs and layoffs of city staffers. The worst thing you can do in a recession is cut public jobs.
At the Oct. 21 hearing, the supervisors were a bit dubious. "We need to be straightforward and real," said Board President Aaron Peskin. "Not half-baked schemes and empty promises." But if Newsom and his downtown and landlord allies get their way, the board that takes office in January could be very different. The progressives who have held the line on cuts, pushed for higher taxes on the wealthy, and promoted measures that will actually help the economy could wind up in the minority. And we could see a dramatic shift to the right in economic policy.
The November election is critical and the top of the ticket isn't the only vote that matters. Preserving the progressive majority on the board and passing the key ballot measures will take the city a long way toward avoiding the worst of what could be a catastrophic economic downturn.
Let's look at the ballot from that perspective:
•<\!s> Proposition H would inject millions into the economy. San Francisco residents and businesses pay some of the highest electric rates in the country, and money that goes to Pacific Gas and Electric Co. is sucked right out of town and invested elsewhere. Since electricity is a necessity, cutting electric rates would instantly inject cash into the economy. In fact, a 2002 study by Hofstra University economist Irwin Kellner showed that public power expanded the economy of Long Island. by $10 billion over the first four years after that region got rid of its private electric utility.
Based on his methodology and calculations, we estimated in 2002 that PG&E cost the local economy $620 million over the previous two years (see "The $620 million shakedown," 10/4/02). Updating those figures today shows a dramatic impact: In the past decade, PG&E rate hikes have taken 1.015 billion out of the local economy. And if, as we have estimated, a public power agency could cut rates by 15 percent, that would inject $477 million a year into the local economy (see sfbg.com for a detailed calculation).