Proposition S - Set Asides PolicyNovember 1, 2008
What it does
Proposition S is an ordinance that would establish a policy that any new budget set-asides proposed at the ballot in the future should conform to certain guidelines. Budget set-asides are rules that require the City to set aside — for a particular purpose — part of the City budget that otherwise would be available to the mayor and Board of Supervisors to decide how to spend. Because voters approve these rules at the ballot, they usually cannot be changed except by another vote of the people. Some set-asides dedicate a set portion of City revenues such as the property tax to a specific use, such as libraries, childrenes programs or Muni. Other set-asides mandate a minimum annual appropriation for a specific program or a minimum level of service — such as the minimum staffing requirements at the police and fire departments.
Prop. S stipulates that future set-aside measures should:
- Identify a funding stream to pay for the dedicated funding
- Have a annual allowable growth of not greater than two percent
- Automatically expire no later than ten years after adoption
- Include an expanded statement from the City controller in the Voter Information Pamphlet on the fiscal impact of budget set-aside ballot measures including whether the proposed set-aside identifies a "specific, adequate new funding source".
Most of the measure's provisions would not legally bind voters or the drafters of set-aside measures in the future. The only provision in Prop. S with the force of law, and therefore not revocable without a specific vote of the people to change it, is the controller's statement in the Voter Information Pamphlet reminding voters of the policy adopted in Prop. S and the fiscal tradeoffs involved in the proposed set-aside measure. Prop. S is not retroactive and therefore would not affect set-asides now in effect.
Why it is on the ballot
The mayor introduced this ordinance to the Board of Supervisors, but when it did not receive sufficient support to become law, the mayor introduced it as an amendment to the San Francisco City Charter for the November ballot. When delays arose in scheduling the amendment for the public hearing required before it could be placed on the ballot, the Mayor's Office also introduced the measure as an ordinance — which meant it could go on the November ballot without any action by the Board of Supervisors. The Board of Supervisors ultimately held a hearing on both the ordinance and the charter amendment, although the charter amendment did not receive sufficient votes from the board to get onto the ballot.
In recent years, an increasing number of set-asides have reduced the discretionary portion of the budget — that is, the part that the mayor and the supervisors may direct toward any purpose. In fiscal year 2007-2008, the City's total revenue was approximately $6.07 billion. Of that amount, only $2.83 billion was General Fund money. The General Fund is where most general tax revenues go, and is the City's primary pool of discretionary money. However, of the $2.82 billion in the General Fund, existing set-asides and spending requirements leave only approximately $1.11 billion as truly discretionary funds. In other words, only about 18 percent of the City budget is available for policy makers to allocate for any purpose they see fit. This measure is an attempt to curtail the decline in the proportion of the General Fund available for discretionary spending.
SPUR has been a leading voice in calling for limiting the impact of set-asides on the budget. In response to the renewal of the library set-aside, Proposition D, in November 2007 — a measure SPUR supported — we developed a policy paper with specific recommendations regarding future set-asides.
Proposition S includes several of the recommendations from SPUR's paper:
- Set-asides should be tied to a new revenue source.
- All set-aside measures should expire after ten years.
- When on the ballot, the controller's statement should include the cost of the set-aside and the likely effect on other services.
SPUR's paper also included suggestions that are not incorporated in Prop. S:
- Allow the Board of Supervisors to alter the measure by the vote of a super-majority of nine of the 11 supervisors.
- Require the City controller to evaluate the outcomes of programs supported by set-asides every five years.
- rovide a clause for the suspension of set-asides in the event of a fiscal emergency.
Most set-asides are codified in the San Francisco City Charter, which is San Francisco's "constitution," and can be changed only by a majority vote at the ballot. Since the Charter is the most powerful form of local law, its provisions supersede any ordinance, even one approved by the voters. Even if Prop. S were a charter amendment, it would not be legally binding, as any subsequent change to charter would take precedence — even if it conflicted with existing Charter language. The only legally binding way to constrain future set-asides in the manner proposed in Prop. S would be to make a change to state law. As a result, proponents of Prop. S felt that the best way to limit future set-asides was to ask the voters to go on record as approving restrictions on set-asides. Even if these restrictions are not legally binding, advocates believe, the statement from voters would encourage advocates of future set-asides to either reconsider, or to include the suggestions spelled out in Prop. S.
Arguments in favor of Prop. S:
- This measure continues an important dialogue around the fiscal impact of set-asides on the City budget.
- It allows voters to understand the impact of set-asides on the City budget, and to vote according to that understanding.
- If followed by future drafters of set-asides, the measure would improve the quality of public policy in San Francisco.
- Many set-asides should be restricted, as they do not allow the City to alter its priorities when circumstances change. Therefore, requiring set-asides to expire allows for increased flexibility in the future.
- The main ideas in this ordinance are identical to those already suggested and recommended by SPUR.
Arguments against Prop. S:
- This measure does not solve the problem of set-asides because it does not affect existing set-asides. Instead, it freezes the problem in its current state. It is an incremental approach that does not result in fundamental change or in the "freeing up" of any specific revenue.
- Any new policy on set-asides should include the possibility of suspending them in times of fiscal emergency and should allow the Board of Supervisors to revise a program supported by a set-aside by means of a super-majority vote.
- Requiring the controller's statement to include information on the fiscal impact of a new measure, along with existing set-asides, might not affect voter behavior.
- This proposition requires the voters to evaluate the quality and impact of a new proposal when, in fact, proponents should provide that evaluation.
While SPUR often has supported set-asides, we usually are skeptical of them and understand their fiscal impact. The policy statement SPUR adopted in February of 2008 was intended to clarify SPUR's position on set-asides and to propose a series of changes that would improve set-asides in the future. Prop. S includes most of the suggestions. While it does not include our idea to suspend all set-asides in fiscal emergencies, it would impose some limits on what set-asides can do, and continues an important dialogue around the impact of set-asides in the City's budget, which makes it well worth supporting.
SPUR recommends a "Yes" vote on Prop. S.