SF activists who bungled Amazon’s tax measure can probably take it off the ballot

A San Francisco judge on Thursday issued an interim ruling saying he was inclined to let supporters remove a measure intended to tax Amazon from the November ballot.

The request came from its backers after they realized the measure might not apply to the e-commerce giant and could instead trap hundreds of small businesses and reduce the city’s overall revenue.

A hearing will take place on Friday and the judge will issue a final decision by the end of the day on Wednesday.

Affordable housing organization TODCO and its director John Elberling wrote Proposal K to generate money for a Guaranteed Basic Income program, which traditionally provides regular, unconditional cash payments to low-income people. Elberling said he spent a total of about $450,000 of TODCO’s money on the measure, and legal fees could add another $25,000.

They won the backing of former Stockton Mayor and Universal Basic Income superstar Michael Tubbs and Supervisory Board Chairman Shamann Walton and garnered nearly 20,000 signatures to put it on the ballot.

But that’s when the city’s Small Business Commission chairman, Sharky Laguana, heard the measure might not apply to Amazon because the e-commerce giant likely earns more than 80% of his income in San Francisco through web services, so he would be taxed. under another category. Instead, Laguana feared that Prop. K does harm to small businesses.

After Laguana raised a red flag, Elberling asked the court to remove him from the ballot, arguing in filings that, based on a city comptroller’s report, it would result in less revenue for the city’s general fund. , which pays for basic services.

Critics said the incident highlighted the sometimes convoluted and nonsensical nature of ballot measures, which can be poorly written by political interests and confusing for voters. Voters in the city will face 15 measures alone in November. Another electoral measure is also being challenged in court.

“Unless this Court acts, San Francisco will be forced to hold an election for an initiative that even its supporters admit inadvertently mischaracterized voters in documents designed to garner support from signatories. of the petition,” the petition reads.

“Despite our due diligence, the measurement is flawed. The technical aspects of the operation of the proposed measure could have unintended consequences for some of the same San Francisco small businesses we aim to support,” Elberling said in an emailed statement. “For this reason, we are suspending our campaign for Prop. K – but we are not suspending our efforts to tax massive e-commerce companies that have not paid their fair share.”

Laguana did not blame TODCO and said the incident gave him hope that someone in city politics was ready to correct his course after realizing he had made a mistake.

Prop. K isn’t the only potential confusion awaiting voters. There are two sets of dueling ballot measures that voters will face in November. Supporters of one of the dueling affordable housing measures have taken legal action to try to remove the other. But if it stays on, voters might get confused trying to parse out the differences between the two. And in another example of an about-face, a measure will reverse a decision on the ballot two years ago to split the Department of Public Works in two. The change turned out to be more expensive and more complicated than expected, and now city officials are trying to reverse it.

David McCuan, a political science professor at Sonoma State University, said such fiascos are not unique to San Francisco and that errors in ballot metrics are common.

“You see these measures hastily drafted by activists that are drafted to be put before voters and they are often riddled with unintended consequences and spillover effects that are designed to send a message and are not necessarily designed to be a hermetic law,” McCuan said.

Although he said the current situation may be a “mess,” it was difficult to argue that the system should be changed and he was agnostic about whether there were too many ballot measures in general.

Elberling, the man behind the prop. K, is a controversial political broker whose organization spent more than $1.35 million from 2016 to 2021 to fund ballot measures. Elberling returned to the spotlight last year when his group successfully lobbied supervisors to uphold his call for a nearly 500-unit housing estate on Stevenson Street due to gentrification and environmental concerns, a decision that state housing officials are investigating. He has also been criticized recently for his involvement in a promised equity study which did not take place, delaying rezoning in the city core.

The other petitioner is Kaylah Williams, a flight attendant and labor organizer who was the campaign manager for two recalled elected officials – school board member Alison Collins and district attorney Chesa Boudin. The Chronicle reached out to Williams via a Twitter message.

Amanda Fried, spokeswoman for the city’s treasurer and tax collector, said supporters of prop. K had sent a copy of their legislation to the office for verification. But it was sent when it was sent for signatures – when it was too late to edit it.

Proposal K would create a new category of e-commerce tax for companies with more than $2.5 million in gross receipts that transport, deliver or ship goods to San Francisco. The city isn’t sure exactly how many businesses this would impact because it doesn’t know how many are doing e-commerce, but there were 637 retail businesses with revenues between $2.5 million and $15 million a year. last, Fried said.

Fried said the department could not disclose the tax rate or class of taxpayer, so it could not confirm whether it would apply to Amazon.

Amazon did not respond to request for comment.

A city comptroller’s report said the measure would generate at least $48 million a year for a new guaranteed income fund and increase funds dedicated to homelessness, but redirect money from the general fund, which pays basic municipal services, resulting in a net loss of $8. million to $12 million annually.

Honey Mahogany, a business owner, candidate for District 6 supervisor and chair of the San Francisco Democratic County Central Committee, sounded the alarm during the committee’s approval process that Prop. K would hurt small business, but the majority of his fellow committee members voted to approve it anyway.

Yes, the votes included a proxy for State Treasurer Fiona Ma and Supervisor Hillary Ronen. Supervisors Gordon Mar and Rafael Mandelman abstained, as did Assembly Members Matt Haney and Phil Ting. Senator Scott Wiener voted no.

Mahogany said everyone is eager to support universal basic income, but when it comes to ballot measures, it’s important to look at the language because “a lot of times it’s sold as one thing, but the devil is in the details”.

“Part of what’s wrong with San Francisco is that we get too bogged down in internal party politics and criticism that comes from outside that sphere is often ignored and unfortunately what ends up by happening is that important information is lost,” Mahogany said.

Laguana also said the measure would hurt small businesses, some of which may not even break even as they still struggle to recover from the pandemic.

He said the measure probably wouldn’t have caused healthy businesses to close “but it’s another cut in the death of a thousand cuts scenario”.

Mallory Moench (her) is a staff writer for the San Francisco Chronicle. Email: [email protected] Twitter:@mallorymoenh

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