Bad budget ideas

Quick fixes may generate cash for now, but they will lead to serious problems later
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EDITORIAL There's nothing easy about solving a half-billion-dollar budget shortfall, and most of the people involved in the grisly process of making the numbers add up at San Francisco City Hall know there will be blood on the floor. Labor unions representing city workers know there will be layoffs, salary concessions, or both. Community-based organizations handling critical front-line services know they'll have to reduce staff and curtail their mission-driven operations. The supervisors know that a lot of good projects and great ideas won't get funded this year.

The mayor, unfortunately, isn't acting as if this were a crisis at all — he's been out of town more than he's been around the past few weeks. The San Francisco Chamber of Commerce and, sadly, some small business leaders, are refusing to accept the idea that taxes — some taxes, not enough to stave off deep cuts, but enough to prevent disaster — ought to be part of any budget package.

And along with the cuts — which, as Rebecca Bowe reports on page 11, will have far-reaching implications for San Franciscans — a number of really bad ideas have been floated, most of them quick fixes that would generate cash for now, but lead to serious problems later.

Among the worst ideas the mayor has put forward — in fact, it's one of the worst budget ideas we've ever heard — is the notion of increasing the number of condominium conversion permits from 200 per year to 1,500 per year, and possibly allowing every property owner waiting for a conversion permit to get one, now, for a price.

It's true that selling off condo conversion permits would bring in revenue. Raffling off building permits and planning code variances would bring in money, and so would selling development rights in city parks, and so would auctioning off appointments to boards and commissions. There are lots of stupid ways to generate cash, and the fact that a proposal would be lucrative is not by itself an argument in favor of it — even in times like these.

There's a good reason the city limits condo conversions. Nearly every piece of property that becomes a condominium was once a rental unit, and the speculative pressure to take rent-controlled apartments and turn them into market-rate condos is immense. It's bad enough that tenants — particularly those with relatively low rent — face eviction every day because of the state's Ellis Act and the push by real-estate interests to create tenancies in common. Without conversion limits, the number of those evictions would soar; rent control would be eviscerated, the cost of housing would rise, and the economic cleansing of San Francisco would roll forward another few giant steps.

Newsom and his real-estate industry allies like to say that this sort of proposal is painless, since nobody has to pay higher taxes. Only people who want to convert their units, and are willing to pay a high fee for the right, would wind up paying. But that's silly — the tenants of San Francisco would pay the cost — an immense cost — while the wealthier property owners made profits.

Selling off the taxi medallions (see "Don't privatize the cab medallions, 1/21/09), another Newsom idea, fits in the same category. In the short term, it could bring millions into the city coffers. Long term, it would turn control of the taxi industry back to speculators and big companies, hurting the drivers and the public.

The mayor (and Sup. Sean Elsbernd) also like to talk about eliminating set-asides — those parts of the budget that voters have earmarked for particular purposes. But most of that money (the Children's Fund, for example) goes to worthy programs: eliminating the "set-aside" protecting doesn't save any money unless you cut those programs.

There are plenty of good budget ideas out there (see "Beyond the bloody cuts, 12/17/08).

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