Who shares the pain?

MAYOR GAVIN NEWSOM sent out memos last week asking every department to prepare for a significant budget cut. He's also asking the city employee unions for major concessions, givebacks of about $53 million. None of that is a surprise: the city's facing a budget deficit of $352 million, and everyone agrees it's going to be almost impossible to close that gap without spending reductions.

But Newsom said early on in his administration that he insisted every part of town share the budget pain – and so far, we haven't seen anything resembling cries of shared pain coming from downtown. The San Francisco Board of Supervisors should declare Newsom's budget dead on arrival if it doesn't include significant new revenue enhancements from the people who are most able to pay.

Let's remember: even in a deep recession, some of the biggest companies in the city have been reporting big profits. The big commercial and residential landlords have done very well over the past decade from soaring property values and tax cuts out of Washington, D.C., and Sacramento. This is still a very wealthy city – and over the past 20 years, the wealth has shifted dramatically upward. It's entirely fair to ask the wealthiest to pay a large part of the burden of balancing the deficit.

It's good economics too: cutting the budgets of city departments inevitably means cutting jobs – hundreds or even thousands of good-paying, unionized city jobs – and that's the last thing you want to do in a recession. The city of San Francisco is one of the largest employers in town, and when those jobs disappear, the impacts are immediate: less money is spent with local merchants, less goes to local nonprofits and charities, more people need unemployment assistance and public services (which are less available because of the cuts) – and the bleak economy in San Francisco becomes bleaker.

Some of the cuts Newsom's suggesting are just dumb. Reducing Muni service saves cash in the short term but drives more people into their cars, adding to parking woes, pollution, and costly traffic problems. Cutting the Assessor's Office is lunacy: as we reported last week, Assessor Mabel Teng is trying to crack down on giant commercial landlords who are seeking big tax cuts from the city, and hiring more staff for that battle will far more than pay for itself. In fact, by Teng's analysis, an additional $300,000 in staffing would bring the city some $35 million in new revenue in the coming fiscal year. The last thing Newsom should do is get rid of people who are bringing in cash.

And those sorts of foolish cuts are unnecessary. There are plenty of places Newsom can look to for money to shore up the city's finances. A few obvious examples:

• Raise the Pacific Gas and Electric Co. franchise fee. In one of the great scandals in city history, PG&E's franchise fee – the amount the utility pays every year for the right to run its lines and poles over and under city property – was set in 1939 at 0.5 percent of the company's gross revenues in the city. The deal called for the fee to remain the same in perpetuity – but there's no way that legal arrangement would stand up in court.

So while most cities in the country are collecting around 4 percent from gas and electric utilities, San Francisco gets a pittance. The difference? At least $20 million a year (see "Giving away the Store," 10/6/99).

• Change the local business tax. San Francisco charges big, medium, and small businesses the same rate of tax. That's not fair – and it's not good for the economy. Small, locally owned, independent businesses create the most jobs in town and can least afford high taxes. The simple solution is to rewrite the tax to make it an assessment on both payroll and gross receipts – and set up a progressive schedule that would charge the biggest employers and wealthiest firms a higher percentage. Raising the tax on the top bracket could bring in millions (depending on the tax rate) – and also offer relief to the smallest firms in town.

• Raise the real estate transfer tax. The supervisors tried this last year and got shot down on the ballot (thanks to a campaign of lies by the landlords). But if Newsom got behind the idea, it would have a much better chance. And it deserves new consideration anyway, given the city's desperate needs. We'd argue that a higher tax ought to apply to any property sold for more than $1 million. While there are a lot more million-dollar houses in the city these days, and nobody wants to make it harder for San Franciscans to buy homes, the fact is that the seller – not the buyer – pays this tax, and frankly, anyone who's selling a house for $1 million can afford to pay a few thousand more to the city.

• Fight the property tax-assessment reductions. Newsom hasn't said a word about the dozens of big property owners who are seeking a combined total of more than $100 million in property tax cuts from the city (see "The Millionaire Beggars," 4/7/04). Instead, he's trying to cut the assessor's budget. Newsom ought to join Teng's public call that these wealthy landlords drop their assessment appeals this year – and if they won't, he should vow to devote every possible city resource to fighting them.

There are plenty of other ideas out there to raise new money for the city. Unfortunately, the Board of Supervisors committee (headed by Sup. Fiona Ma) that was supposed to come up with revenue-generation proposals has completely dropped the ball. But that doesn't mean Newsom has to assume that the entire deficit will be made up by deep, painful cuts.

If Newsom comes forward with a budget that's just cuts, every San Franciscan who depends on public services (and that's just about everyone in town) should descend on City Hall and demand that Newsom actually keep his original promise and make the wealthy, as well as the rest of us, pay their fair share.