Good morning.

The meeting will come to order.

Welcome to the July 17, 2024 meeting of the Budget and Finance Committee.

I am Supervisor Connie Chan, Chair of the Committee.

I'm joined by Supervisor Mirna Malgar, our board president Aaron Paskin, and shortly by Vice Chair Rafaya Mendelman.

Our clerk is Brent Khalipa.

I would like to thank SFGOP TV for broadcasting this meeting.

Mr.

Clerk, do you have any announcement?

Thank you, Madam Chair.

Just a friendly reminder to those in attendance to please make sure to silence all cell phones and electronic devices to prevent interruptions to our proceedings.

And should you have any documents to be included as part of the file, they should be submitted to myself, the clerk.

Public comment will be taken on each item on this agenda when your item of interest comes up and public comment is called.

Please line up to speak on the west side of the chamber to your right, my left along those curtains.

And while not required to provide public comment, we do invite you to fill out a comment card and leave them on the trade by the television to your left by the doors.

If you wish to be accurately recorded for the minutes, alternatively, you may submit public comment in writing in either of the following ways.

Email them to myself, the budget and finance committee clerk at B R E N T dot J A L I P A Hat S F G-O-V dot ORG.

If you submit public comment via email, it will be forwarded to the supervisors and also included as part of the official file.

You may also send your written comments via U.S.

Postal Service to our office in City Hall at one, Dr.

Carlton B.

Goodlett Place.

Room 244, San Francisco, California 94102.

And finally, Madam Chair, items acted upon today are expected to appear on the Board of Supervisors' agenda of July 23rd, unless otherwise stated.

Madam Chair.

Thank you, Mr.

Clerk.

I uh before we call the agenda, I would like to just remind the public that we have uh budget and legislative analyst report for items one, two, three, and six through 16 on today's agenda.

And for those items, we will have the department presentation first, followed by the budget and legislative analyst.

Then we will take questions and then public comment.

And uh before we go any further, we're also uh limiting the public comments today to one minute.

And then with that and uh Mr.

Clerk, uh today we ought to call it out of the order as well.

Um, and that we are going to call item out of order of the agenda.

And let's call item number three.

Yes, item number three is an ordinance amending the business and tax regulations code to lower the gross receipts tax rates for business activities described in uh the North American Industry Classification System, Code 721.

The classification generally applicable, with some exceptions to provide lodging or short-term um accommodations for travelers, vacationers, and others uh applicable to tax gross receipts between 2.5 million and one cent and 25 million in tax years 2025 and 2026, from 253,000th of a percent to 201,000th of a percent in tax year 2027, from 264,000th of a percent to 209,000th of a percent, uh, and in tax year 2028 and subsequent tax years from 271,000th of a percent to 215,000th of a percent, all conditioned on the passage of the ballot measure entitled Local Small Business Tax Cut Ordinance at the November 5th, 2024 general election.

Madam Chair.

Thank you, and President Peskin.

Thank you, Chair Chan.

Supervisor Melgar.

Uh, as you are all aware, a measure uh that is entitled the Local Small Business Tax Cut Ordinance has been the subject of a signature drive and has been turned into the Department of Elections and will appear on this November's ballot.

Uh that measure that uh reforms our business gross receipts tax structure was informed by uh data that was um uh formulated by our city and our controller's office and uh had uh an incorrect assumption that is being changed by this legislation uh as it relates to gross receipts for accommodations, and this corrects that error.

And should this legislation pass and should the ballot measure pass?

Uh this would fix the uh incorrect tax rate that the signature uh effort relied on.

Um, so it is a uh it is in essence a technical amendment that we would put in place today that would become effective and only become effective if the local small business tax cut ordinance is passed by the voters in November.

Thank you.

Good morning, supervisors Nick Menard from the budget legislative analyst office.

I've conferred with the controller's office about the impact of this ordinance, which only takes effect if the ballot measure to change the city's gross receipts tax passes in November 2024.

The fiscal impact of this particular change is about 400,000 a year.

But the ballot measure as a whole is expected to be slightly revenue neutral or revenue positive over time.

Those estimates will be released later this summer, but we do consider approval of this item to be a policy matter for the board.

And Madam Chair and Supervisor Melgar uh Ted Egan, who has been seminal in this project, is here and can answer any questions that you may have and may have a presentation.

Thank you.

Um I guess it's just to kind of concur or confirm what the budget and legislative analyst has indicated, whether this ballot measure is so if it passed and supported by San Francisco voters, that it resulted in revenue either neutral or increase.

Good morning, supervisors Ted Egan with the controller's office.

And to your your question, Chair Chan.

Yes, it is our current analysis of the ballot measure that it will generate slightly more revenue than the status quo in the later years of the proposal.

It features across the board business tax increases in tax year 2026 and 2027, and that additional revenue would make the overall measure revenue positive.

Uh, we will provide in the next few weeks a detailed accounting of the expected revenue uh from the measure uh over time.