Proposition D - Small Business Commission

What it does

This Charter amendment hopes to increase the influence of the current Small Business Commission on City policies. It makes the commission part of the Charter, and increases its membership from five who serve at the pleasure of the Mayor to four mayoral appointments and three Board of Supervisors’ appointments. Commissioners, all non-paid, would serve staggered, fixed terms. Six would be current or former small business owners or officers; one could be a representative of a neighborhood-serving non-profit. The commissioners would reflect the “diversity of neighborhood interests” in the city. The new commission would oversee the Office of Small Business, staffed by a commission director and secretary. Under existing Charter provisions, the director would be appointed by the Mayor from a list of three candidates submitted by the commission. Prop. D was placed on the ballot by the Board of Supervisors at the request of a coalition of small business groups.

Why it is on the ballot

Over the past twenty years, there have been several variations of small business advisory committees and task forces in San Francisco. A 1999 ordinance created the present Small Business Commission, with five commissioners appointed by the mayor. This commission is advisory only and does not have any authority over the Office of Small Business, its director, or its budget. The annual budget of this Office is about $400,000.

Small business groups claim that their interests are not adequately represented at City Hall and point to delayed and “poor” commission and director appointments. A coalition of associations calling itself the San Francisco Small Business Network (including the Council of District Merchants, Chamber of Commerce, Small Business Advocates, Building Owners and Managers Association), representing about 17,000 businesses are the sponsors of Prop D.

Pros

Proponents state:

• Given that small businesses are important to the health of the city, their needs should be considered in governmental decisions. A commission dedicated to improving the conditions for small businesses is a way to accomplish this
• The Commission could help businesses to navigate City Hall’s bureaucratic maze as well as recommend how to improve the city’s business climate and become more responsive to business problems

Cons

Opponents state:

• It’s unlikely that this commission will be able to accomplish much of significance. With a tiny budget, and virtually no area of authority, it is largely a symbolic statement intended to say “small businesses are important”
• Prop. D expresses the tendency in San Francisco politics for every interest group to establish its cause’s validity by getting a new commission. In that sense, this commission would trivialize the real importance of small businesses to the economy and neighborhood fabric of the city by segregating it from the core functions of city government
• What the city needs is an economic development commission, not a small-business commission
• It is likely that a principal activity of the commission will be to grow its budget and staff. Over time, commissions without department functions tend to create the need for further staff, expand their functions, and try to operate programs. The growth of these commissions creates further funding demands on scarce city dollars. This will fund political operatives to “look for something to do”
• Splitting the appointments between the mayor and the supervisors is a bad idea. It will make the department a “free agent” that cannot be reliably managed by the executive of City government

SPUR's analysis

According to the State Department of Finance, in 2001 there were approximately 110,400 businesses in San Francisco. Of those, 67,900 had no employees (mostly sole proprietorships). Of the remaining 42,500, 113 had over 500 employees and 731 had between 100 and 500 employees, leaving some 41,656 with fewer than 100 employees.

The Small Business Network believes that their interests and the economy are slighted when legislation, administrative rules, and fiscal actions affect taxes and fees. While taxes and fees concern all businesses, Prop. D’s advocates feel that a commission with representation from medium-sized and large businesses wouldn’t win at the ballot, due to the perceived political unpopularity of “big business” among the San Francisco electorate.

So, what is a small business? The State of California defines a small business as 100 or fewer employees and $10 million or less annual revenues. The federal government’s definition is 500 or fewer employees for manufacturing, and $6 million annual revenue for non-manufacturing businesses. A San Francisco definition would be left to a subsequent ordinance if Prop. D passes.

Rather than having details delineated in the Charter amendment, the commission’s specific responsibilities would be defined by ordinance if Prop. D passes.However, the Small Business Network says its priorities are to:

• Increase neighborhood commercial parking (which ironically is the best way to destroy the pedestrian vitality of the city’s neighborhood shopping districts)
• Get City government to purchase more goods from local businesses (which by definition means increasing costs or decreasing quality—where local businesses offer the best price/quality package, they are already getting the City’s business)
• Address quality of life issues such as clean streets, vagrancy, and homeless impacts (given that other public agencies with budgets thousands of times larger than the Small Business Commission are already addressing these problems, it appears that the goal is simply to provide a pulpit for the commission to opine on whatever they think is wrong with the city)
• Improve accountability of the City to deliver cost efficient, effective, quality services (again, suggesting that real government reform will come from this commission seems ludicrous—the effective goal will be to provide public funding for small-business advocacy)

San Francisco is faced with a serious set of policy issues relating to economic development. Given all the costs of doing business in the city, we must ensure the advantages of being in San Francisco are enough to keep firms here. But the city has no economic development policy, nobody whose job is to attract and retain businesses, and no one authorized to negotiate deals to bring jobs into the city. Prop. D will not fill these needs.

By the same token, this commission cannot be expected to set policy in areas that affect businesses, large or small. The reason is simply that virtually everything the city does affects business— taxation levels, zoning decisions, providing transit— and the hundreds of decisions that add up to “quality of life.” The city has dozens of departments staffed by thousands of civil service employees (in addition to elected officials) who are going to set policies that affect business.

With a full appreciation of how modest the results of this commission will be, taken together with the waste inherent in yet another toothless (and ill-defined) commission and SPUR believes in the importance of promoting small business.

SPUR recommends a "Yes" vote on Prop. D.