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By Jon Coupal
Oh, the irony. San Francisco is perhaps the most progressive city in the United States, although Portland and Seattle might put up an argument. So how is it that the one thing that might save the City by the Bay from the fiscal abyss is Proposition 13, the iconic tax-cutting initiative backed by conservative Howard Jarvis and approved by voters in 1978?
No one disputes that San Francisco is in crisis. The city’s profligate spending and poor management has led to a myriad of ancillary problems. That the city planned to spend $1.7 million for a bathroom in a park may be the source of humorous derision, but it is an example of seriously dysfunctional governance. (Private donations for the restroom subsequently reduced the cost to the city).
A major structural problem is San Francisco’s diminishing population. As people leave the city, they take their tax dollars with them. The steepest decline occurred between 2019 and 2021 when the city lost 6.3 percent of its population, a rate of decline unprecedented for any major U.S. city. The only silver lining is that the rate of decline slowed to “only” half a percent from July 2021 to July 2022.
Making matters worse is the fact that downtown San Francisco has experienced the weakest recovery from the pandemic out of 62 North American cities according to a San Francisco Chronicle article dated January 18, 2023. Its overreliance on high tech and finance, whose workers are able to work remotely, has morphed downtown into a ghost town. Office vacancies are at an all-time high and rents for office space are falling fast.
The exodus of high-wealth individuals and businesses has wreaked havoc on the San Francisco’s budget, which is now projected to be in the hole by $780 million over the next two fiscal years.
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