Statement: Impact of Downtown Business Closures on San Francisco’s Budget
Statement by Supervisor Joel Engardio
San Francisco Board of Supervisors meeting
May 16, 2023
Impact of Downtown Business Closures on San Francisco’s Budget
It’s concerning to see the steady stream of announcements that downtown businesses are leaving.
About half of our city budget comes from the general fund. And thirteen percent of the general fund comes from business taxes. These taxes fund our city services, from mental health, to early childhood care, to road paving. The homelessness gross receipts tax comes from businesses and directly funds homelessness and supportive housing programs.
San Francisco has the highest business tax rates for large companies in the Bay Area. Our progressive tax structure requires companies with larger gross receipts pay larger tax bills. These businesses also generate sales tax revenue that customers pay. Business employees eat in our restaurants, tip our workers, use public transportation, and pay parking taxes. So when a big business leaves, it creates ripple effects throughout our city’s tax revenue system.
The San Francisco Chronicle said a “Bay Area Council report reasoned that high taxes in San Francisco compared to other nearby cities could contribute to pushing the types of companies it used as examples — companies with $100 million, $500 million and $750 million in taxable gross receipts — out of the city.”
San Francisco also has a progressive budget: we prioritize our spending on programs and services that benefit the most needy and underserved. When we lose businesses, we lose the opportunity to advance our citywide priorities.
We need to understand the impact of downtown business closures. I’m calling for a hearing with the city controller on lost revenues and what it means for the city budget.
News articles:
Mayor Breed Introduces Tax Reform Legislation
Nordstrom to Shutter Both San Francisco Downtown Stores
Chart of business tax, sales and use, property tax charged by various Bay Area cities