Proposition O - Use of New Sales Tax Funds

Voter Guide
November 1, 2004
This measure appeared on the November 2004 San Francisco ballot.

 

What it does

This is a companion measure to Proposition J, the proposed Transactions and Use Tax (sales tax) increase, which is also on the November ballot. Proposition O is a non-binding policy statement (i.e. it is purely advisory) recommending that the proposed one-quarter of one percent increase in the sales tax, if approved by voters, be expended to support and expand programs for trauma and emergency services, low income, vulnerable communities, including seniors, the disabled, children and homeless individuals and families.

Why it is on the ballot

The proposed sales tax increase is a "general tax," meaning that all revenues generated would be deposited in the City's general fund. These revenues can be used for any general governmental purpose. In fact, the revenues from an increase in the sales tax are already incorporated into the recently adopted City budget for FY 2004-2005.

The Board of Supervisors placed this "purely advisory" policy statement on the ballot.

Pros

Those who support Proposition O state:

  • Approval of the policy statement provides guidance to the Board of Supervisors and mayor about program priorities for expenditure of increased sales taxes.
  • The policy statement will help to persuade voters that the much-needed sales tax revenues will be used for a worthwhile purpose, while avoiding the difficult two-thirds threshold for passage of special taxes.

Cons

Those who oppose Proposition O state:

  • Cynical, politically motivated policy statements such as this should not be on the ballot.
  • The proposed sales tax increase is already committed in the City budget. The policy statement will not affect the allocation of the revenues.
  • The measure misleads voters into thinking that they have a say in the expenditure of sales tax revenues when in actuality the policy is "purely advisory" and non-binding on the Board of Supervisors and mayor.

SPUR's analysis

Under State law, a general tax measure requires a 50 percent plus one majority to be adopted, as opposed to a "special tax" (in which specific programs are funded by the new tax revenues), which would require a two-thirds vote. Since Proposition J is a general tax, the revenues raised can only be allocated through the normal budget process, not by the voters at the ballot box.

While Proposition O seems to direct the City in how the sales tax funds will be used, it is in reality only a expression of voter preferences and has no legal impact on how the funds are spent. The language of the policy statement states that it is, purely advisory and does not limit in anyway the ability of the City to expend the (sales tax) revenues for any City purpose.

This policy statement is an attempt to trigger a positive response from the electorate for passage of the tax measure. Many believe that compared to some other taxes, the sales tax is somewhat regressive in nature, meaning that lower-income individuals pay a higher portion of their income in sales taxes than wealthier individuals. By invoking the support and expansion of programs for trauma and emergency services, low income, vulnerable communities, including seniors, the disabled, children and homeless individuals and families, the proponents hope to sway voters to adopt the sales tax increase. Voters may be more willing to adopt a tax increase if they believe it will be put to use in helping the disadvantaged.

There are times when policy makers develop through a public process a specific set of projects to be financed by a general tax increase. Voters are asked to cast a majority vote supporting both the general tax increase and a separate measure containing the specific projects. This allows the City to identify specific programs to be funded while avoiding the two-thirds threshold for special taxes under state law. The courts have upheld the approach, but it does not guarantee that funds will be spent in accordance with the wishes of the voters as expressed in the policy statement.

SPUR recommends a "No" vote on Proposition O. While everybody supports trauma and emergency services, low income, vulnerable communities, including seniors, the disabled, children and homeless individuals and families, this measure is both meaningless and misleading, and should not be on the ballot. While it will do no harm if it passes, the measure is a distraction of voter attention from real issues with real implications for City government.

SPUR recommends a "No" vote on Proposition O.