Proposition M - Economic Development

What it does

This measure, put on the ballot by the Mayor as an amendment to the Administrative Code, would require the preparation and annual updating of an Economic Development Plan. It would provide for administration and oversight, together with a funding mechanism. The legislation would also require that the Office of Economic Development prepare an analysis of the potential impacts of proposed legislation upon the San Francisco economy and tax revenues prior to enactment by the Board of Supervisors.

Why it is on the ballot

The Mayor currently has an Office of Economic Development (OED), with an annual budget of about $2 million, almost all of which is spent on personnel. This proposal would expand the funding available to the OED and allow it to undertake additional business retention and attraction activities that a city manager or economic development groups in other cities traditionally undertake.

Pros

Those who support Prop M state::

• San Francisco is woefully behind other jurisdictions in economic development efforts, and that these efforts are increasingly important in both good and bad economic times.

Cons

Those who oppose Prop M state:

• This measure was introduced just before the deadline without opportunity for debate, and could have been accomplished without resorting to the ballot.
• The economic impact report has the potential to be a bureaucratic hindrance rather than a benefit, and the legislation provides no guidance as to how that mechanism will be administered.

SPUR's analysis

Within six months of the effective date of the legislation, and annually thereafter, the OED would be required to prepare the San Francisco Economic Development Plan. The Plan would include at least eight specified elements related primarily to job creation and retention. Prior to enactment of "any legislation proposed by the Board of Supervisors relating to a subject area described in the then-current version of The Survey on Barriers to Employment Retention and Attraction," OED will prepare an economic impact report for the legislation.

These efforts would be financed through the Economic Development Fund. Each year the Board would include in its budget an appropriation of not less than 100% of the anticipated revenue from the business registration fees. Although the legislation states that this is an annual dedicated funding source, the Controller advises that it is a "Category II" item, which requires annual appropriation, and would be actually at the discretion of the Board after the initial appropriation. An Economic Development Committee consisting of the Mayor, President of the Board, Treasurer, Controller, Planning Director, OED Director, and the Office of Community Development Director would oversee it.

SPUR recommends a yes vote on Prop M. On balance, it places appropriate attention on economic development, and provides needed funding for this effort. The focus on long-range planning is consistent with SPUR's principles. In addition, the composition of the Committee suggests that the fund has appropriate oversight mechanisms. Although it is described as a dedicated funding source, in reality it is subject to the annual appropriation process. Therefore, we believe it is worth supporting. However, we note that this measure could have gone through the legislative process, and in any event should have been introduced earlier in the process. We also believe that the Committee should provide a line-item budget to the Board of Supervisors each year, and that the Board should exercise its discretion through the appropriation process, particularly if there is a significant increase in revenue, or if administrative costs become a large component of the budget. The economic impact report mechanisms can be useful if appropriate guidelines can be established for its implementation--this should be one of the first charges of the Committee.

SPUR recommends a "Yes" vote on Proposition M.