GRT Updates

sf.citi member companies,

I hope you all are doing well today.

I’m writing to provide you with an update on the conversation with President Yee regarding the City’s GRT tax strategy. In short, Yee articulated his support of Option 4, which is projected to generate $288M in one-time General Fund revenue, with an additional $121M ongoing when the economy improves. Essentially, when the economy improves, they will broaden the 15% GRT uplift to include private education and health services; administrative and support services; utilities; wholesale trade; insurance; transportation and warehousing; and other industries. As Options 1-4 build on each other, Option 4 is evidently the most unfavorable to the business community as compared to other options. Please see below for a full overview, and please see attached for more information on both the General Fund Benefit by Year and the Industry Impacts Under Each Option.

As for next steps, we ask that you act quickly to provide feedback from your companies as this will likely be introduced by President Yee at the upcoming full Board of Supervisors meeting on Tuesday (6/9). As such, we are setting up a second sf.citi member call to discuss our strategy and feedback on this proposal.

sf.citi Members Call re: GRT
Monday, June 8th, 2020
11:00am-11:30am
Call in: 415 429 8325

From there, we will collectively decide best ways to oppose this ballot measure and/or engage with City leadership. Also, in regard to the questions asked during yesterday’s member call regarding Big C and Baby C funding, we have reached out to the Controller and will update you as soon as we are given more information. Please stay tuned.

Thank you all. Please let us know if you have any questions and thank you for your continued membership.

Jen

GRT Options 1-4

OPTION 1 (Base Proposal)

Revenue Impact: $288M in one-time General Fund revenue, $76M ongoing when economy improves

• Proposes unlocking both Prop C (“Big C” and “Little C”) funding streams. For context, the City currently holds approximately $1B in impounded funds in pending lawsuits on these two ballot measures.
• Would replace the payroll tax with a 40% uplift to Gross Receipts taxes, this will help avoid telework loss.
• For businesses making under $1M GRT, it provides a 50% reduction to business registration fees.
• Raises the rates on “Information” businesses immediately, and when the economy improves it imposes a 10% GRT uplift on current rates for cost-insensitive industries. These industries include those who’s revenue is $25M or more, affecting manufacturing and certain services at 50% of the current rate. See below:

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OPTION 2

Revenue Impact: $288M one-time General Fund revenue + $91M ongoing when economy improves

• Same as Option 1 with the following addition: When economy improves, reduce some tax relief for cost-sensitive industries. The following rates become permanent:

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OPTION 3

Revenue Impact: $288M one-time General Fund revenue + $112M ongoing when economy improves

• Same as option 2 with the following addition: When economy improves, raise the GRT uplift to 15% and include real estate (excluding rental and leasing services.

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OPTION 4

Revenue Impact: $288M one-time General Fund revenue + $121M ongoing when economy improves

Same as option 3 with the following addition: When economy improves, broaden the 15% GRT uplift to include private education and health services; administrative and support services; utilities; wholesale trade; insurance; transportation and warehousing; and “activity not listed above”.

Attachments:

• Benefits By Year_Industries Impacted