San Francisco shoppers are in store for some wallet relief when the sales tax drops by 1 percent Friday, but the full discount might be short-lived.
One percent of the state sales tax is set to expire today after Gov. Jerry Brown and other Democrats abandoned hope of persuading Republican lawmakers to allow a vote on extending the tax. The move lowers San Francisco’s sales tax from the current 9.5 percent to 8.5 percent.
But San Francisco voters might be asked on Nov. 1 to enact a local half-percent sales tax on April 1. The half percent raises the sales tax to 9 percent, still cheaper than consumers are paying until July 1. However, the benefit is that San Francisco retains all the money raised by the hike.
Mayor Ed Lee, who is proposing the increase, says the half-cent tax would generate about $60 million annually for The City’s coffers and be used to pay for rising costs of police and firefighter salaries, as well as public health and social services.
The measure would require approval of two-thirds of Nov. 8 voters and would be voided if the state renews the 1 percent tax within a year. It would sunset in December 2022.
Not everyone sees the wisdom in the mayor’s proposal. Stephen Cornell, owner of Brownies Hardware on Polk and Sacramento streets, said, “We’re in competition with our neighbors. [Our sales tax] shouldn’t be above anybody else.”
Nearby counties’ sales-tax rates would remain lower than San Francisco’s, unless they too go to the voters to enact a local increase. Starting Friday, San Mateo’s will be 8.25 percent, Marin’s 8 percent and Alameda’s 8.75 percent.
Cornell also raised questions about what the cash infusion would buy the taxpayers. “Are we going to get more firemen? More police? It doesn’t say.”
The City’s salary and pension costs continue to increase every year.
“The police, fire and social safety net make up a significant amount of the general fund uses. Therefore, it makes sense for The City to dedicate incoming funds to those purposes,” said Lee’s spokeswoman Christine Falvey. “This is the responsible and prudent measure to take given the pain we know we will feel from the state.”
Scott Hauge, president of Small Business California, said small businesses are mostly supportive of Lee’s half-cent proposal. But he was concerned about a state sales tax increase in later years.
Supervisor Scott Wiener said there is a “near impossibility” of a state sales tax increase and called it “a very theoretical concern.”
“Public safety and public health are two core services we need to provide in The City.” Wiener said.
Mayor Ed Lee is proposing a local half-percent sales tax hike to cover the costs of public safety and some social services. The proposal will need to be approved by two-thirds of San Francisco voters on Nov. 8 and would go into effect April 1.
9.5% Current S.F. sales tax
8.5%: S.F. sales tax after Friday when state reduction is enacted
9%: S.F. sales tax rate April 1 if voters enact half-percent hike
10: The number of years half-percent tax will be in effect
$60M: Total local revenue for FY 2012-13 from hike
$30M: Allocated for police salaries, academy classes, firefighter salaries, etc.
$30M: Allocated for social services, including seniors, child care, health care
Source: Draft Safe Communities Fund Expenditure Plan