A significant financial battle is unfolding in San Francisco as business groups prepare to counter a proposed tax increase backed by labor unions. The San Francisco Chamber of Commerce announced on Monday that it has secured commitments nearing $1 million to support a business-backed initiative aimed at the June ballot. This initiative seeks to counter the Stand Up for San Francisco coalition, which is advocating for an increase in the city’s Overpaid Executive Tax.
The Chamber’s director of public policy, David Harrison, expressed confidence in their funding. “We still have commitments coming in that will be available towards the end of the month or early January, but we have full confidence that we have funding to gather signatures and move forward with the campaign,” he stated. The looming deadline for submitting petitions to the city’s Department of Elections for the June ballot is February 2, 2024.
The business community argues that the proposed union measure, which aims to generate approximately $200 million annually for city services, compels them to act. Harrison emphasized that businesses would prefer not to pursue a ballot measure but feel they must respond to the labor coalition’s efforts.
In a letter sent to union leaders, including Kim Evon of SEIU Local 2015 and Debra Grabelle of IFPTE Local 21, the Chamber urged a resolution to avoid “an unnecessary and harmful fight” at the ballot box. The letter asserts, “We are fully prepared to qualify and pass our measure if the sponsors of the labor community’s measure do not remove theirs. We hope that it does not come to this.”
The union coalition, which has received over $1.34 million in funding from various sources, including SEIU Local 1021, has garnered support from multiple organizations, including the San Francisco Firefighters Local 798 and United Educators of San Francisco. They argue that the Overpaid CEO Act is gaining traction as endorsements from various sectors increase, highlighting the critical need for funding for essential services like hospitals and public safety.
The union-backed initiative proposes both an increase and a modification of the current tax structure for companies with executives earning over 100 times the median wage of San Francisco employees. This measure would also consider employee wages from outside the city, where compensation tends to be higher, thereby broadening the tax base.
The Chamber contends that the unions are disregarding previous agreements made under Proposition M, a tax reform measure approved in November 2024 with 69.5% of votes in favor. This measure significantly lowered the Overpaid Executive Tax, and business leaders argue that the new proposals threaten the stability fostered by Proposition M.
Two business-backed measures have been submitted to the elections department, with plans to select one for advancement. One proposal aims to cut business taxes by $300 million, including canceling scheduled increases and raising the small business tax exemption. The alternative measure would also increase the Overpaid Executive Tax but less aggressively than the union’s proposal, while still providing tax relief for smaller businesses.
Chamber officials described the union-backed tax increase as “bad policy,” warning that it could lead to higher prices for consumers. They suggest that collaboration is essential for maintaining funding for vital public services, including transit systems that support thousands of jobs.
As this conflict intensifies, Mayor Daniel Lurie has expressed concerns over the potential impact of the tax disputes on the city’s finances. San Francisco faces a nearly $1 billion budget deficit over the next two years, prompting Lurie to request significant spending cuts from city departments.
The mayor’s office reiterated a commitment to a balanced budget and highlighted the need for unity between business and labor. “San Franciscans came together to pass Prop M last year so our businesses big and small have the stability to thrive and drive our economic comeback,” the statement read. The mayor emphasized a collective approach to addressing the city’s challenges rather than fostering division.
As the deadline for ballot measures approaches, the outcome of this financial tussle could have lasting implications for San Francisco’s economic landscape and public service funding.
