Proposition B: ‘Chump Change’ or ‘Massive Budget Hole’?

	See how pro-Proposition B activists are spinning the issue in campaign fliers.

The battle over public power and the hospital bond have vacuumed up much of San Francisco’s attention and political capital this season.

But there’s an equally significant, if under-the-radar, item up for grabs: Proposition B.

The "Establishing [an] Affordable Housing Fund" measure mandates that 2.5 cents out of every $100 in property taxes go to create what is essentially a dedicated San Francisco affordable housing account.

Proponents and opponents alike agree that it would raise roughly $2.7 billion over its 15-year lifespan — in fact, that’s about all they agree on.

 Different Narratives, Same Facts

Proponents call the measure an essential and responsible way to ensure funds to build affordable housing for those who need it most.

Opponents, including Mayor Gavin Newsom, see higher taxes, deficit spending and set-asides that eat into the city’s discretionary funds and constrain the Board of Supervisors’ legislative options.

The disjoint between them is a near-perfect example of two very different narratives emerging from the same set of facts.

Indeed, that the San Francisco Planning and Urban Research (SPUR) Association was unable to achieve a necessary majority and could neither endorse nor oppose the measure illustrates its strikingly different interpretations.

The "Yes on Proposition B 2008 — San Francisco Housing Fund" campaign argues that the measure is about ensuring desperately needed homes for city residents who make up to 30 percent of San Francisco’s median income; according to SPUR, that’s roughly $25,000 annually for a family of four.

Groups that paid for arguments in the voters’ handbook — including the Tenderloin Neighborhood Development Corporation, the Chinatown Community Development Center and Mercy Housing of California — assert that it will raise funds so working families can buy their first home, without raising taxes, while also offering housing for seniors and homes for the homeless.

‘Budget Hole’
Calvin Welch, chair of the publicity committee of "Yes on B," rejects opponents’ charges that the initiative will create a massive budget hole.

He argues that the roughly $33 million annually that Proposition B would raise is "chump change" given the size of the city’s discretionary funding.

Welch says that over 15 years the city will have $50 billion in discretionary funding. He also argues that for every dollar the city sets aside for affordable housing, nonprofit groups will leverage $3 to $4 in foundation grants and state and federal funding.

"It is a development subsidy," he says.

In addition, Welch rejects worries that set-asides threaten supervisors’ ability to set policy.

"I do not buy the argument that at this time with this budget we are anywhere near being constrained," he says.

Opponents see it differently.

"Proposition B sets aside a certain portion of the annual budget for affordable housing," says Supervisor Sean Elsbernd. "It is robbing Peter to pay Paul … [It is] never fun to have to say clean streets, safe streets, cops, or health or the Fire Department is more important than housing. But that is what the legislative body is supposed to do on an annual basis." With Proposition B and its set-asides, says Elsbernd, "we are precluding the legislature from having a budget that sets annual priorities."

Elsbernd — who signed the official rebuttal to Proposition B along with the mayor and Supervisors Carmen Chu and Michela Alioto-Pier — also questions Welch’s assertion that the measure is modest: "$2.7 billion over 15 years? If you want to call that small, more power to you."

He notes that the entire Recreation and Park budget over 15 years would be about $750 million, a little less than one-third of the total set aside over the same span of time by Proposition B.

"Social Darwinism"

"I don’t disagree or quibble that we need more money for affordable housing," adds Elsbernd.

But he insists that the measure cannot live up to its goal.

"I believe one of their campaign slogans, ‘Housing for all,’ respectfully, is a joke," Elsbernd adds. "That is nowhere near accurate. You cut off a vast portion of the city with thresholds of who qualifies and who cannot."

Welch calls such critiques "social Darwinism" and "vicious arguments" — because, he alleges, they perpetuate a distinction between deserving and undeserving poor.

He says the proposition allows new teachers, police and firefighters access to Proposition B funds.

Yet that doesn’t address the fact that many two-income families may not qualify, because their combined income would put them above Proposition B’s maximum income thresholds.

According to SPUR’s analysis of Proposition B, a family of four with two working parents earning more than $82,000 a year would not be eligible for the funding proposed by the measure.

If, for example, each parent earned $45,000 a year for a combined total of $90,000, the family would not be eligible.

The issue then becomes a question of focus: given a limited pool of money, what should the cut-off point be? This is where opponents of the bill can charge that many San Franciscans would be shut out.

"Not Inaccurate"

Then there’s that potential budget hole.

Opponents say the choice is between cutting services or raising taxes, because the set-asides will help create a deficit that will have to be tackled.

Proponents say that problem, if it arises, could be dealt with by funds derived from Proposition N and Q, the transfer tax adjustment and the payroll tax extension, respectively.

Yet the question remains as to whether those monies destined for the general fund will be sufficient to fund affordable housing, given all the other needs that unrestricted revenues from general funds are supposed to meet.

An effective argument can be crafted for or against Proposition B, depending on the observer’s starting point.

As consultant David Latterman, president of Fall Line Analytics, stresses, campaign statements, as a rule, "are not inaccurate, but you can slant and shape as well. We all do it. We will highlight and de-highlight, it is just the way the game works."