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Jul 23

GRT

sf.citi member companies,

I hope you are well this morning.

As promised, I want to provide you with an update on what transpired at yesterday’s Budget and Finance Committee meeting, Board of Supervisors meeting, and additional pertinent information from the City Controllers Economic Impact Report on proposed changes to San Francisco’s business taxes.

At the Special Budget and Finance meeting, the Mayor announced her support for the Board of Supervisors GRT proposal with the amendments heard last week. The committee voted on the amended measure in unanimous approval and it was sent to the BOS meeting with a positive recommendation.

At the BOS meeting, the item was not voted on and was subsequently continued as the item needs to sit for one week due to it being placed on the agenda today. Yesterday was the last day for amendments to be introduced and, therefore, no additional amendments are to be made. As a next step, the measure will be heard at next Tuesday’s BOS meeting on July 28th.

Please see below for additional information on the Budget and Finance Committee-approved amendments to the GRT proposal.

Amendments: GRT Proposal (amended legislation attached)

  1. Increases small business exemptions to $2M
  2. Expands industries subject to temporary tax relief including the addition of hospitality, food services, arts, entertainment, and recreation
  3. Reduces the level of an ultimate tax rate increase and delays them
    • Ultimate rate increases reduced from 30% to 15-20%, varying by industry.
    • Phases increase between 2022-2024, rather than a full increase in 2021
    • Add a trigger to delay 2023 and 2024 increases if receipts don’t recover
  4. Extends the duration of backstop tax from 10 to 20 years
  5. Merges the Charter baseline change to the measure

Highlights from the Economic Impact Report (Economic Impact Report here)

Rate Increases by Year 2021 – 2024

  • Information 0%, 10%, 15%, 20%
  • Financial Services 0%, 10%, 15%, 20%
  • Biotechnology 0%, 5%, 10%, 15%
  • Professional, Scientific, and Technical Services 0%, 10%, 15%, 20%

Change in Business Taxes by Industry, 2021-2024

  • Information – $16M, $30M, $36M, $43M
  • Financial Services – $8M, $17M, $21M, $25M
  • Biotechnology – -$1M, -$1M, $0M, $0M
  • Professional, Scientific, and Technical Services – -$6M, $4M, $10M, $15M

We will be sure to update you on what transpires at next week’s Board of Supervisors meeting.

Thank you for your continued membership.

Jen

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