Where Is the Money?
Jul 05, 2005
Where Is the Money?
A recent edition of the San Francisco Chronicle reported that the medium price of homes in the city increased more in one year than the area’s typical household income. Between February and March 2005, prices grew by 6.3 percent; the growth rate over 12 months was 21 percent.
Because the largest percentage of our city budget income comes from property taxes, we should be looking at a windfall in extra income. Yet, even with this staggering increase in revenue, San Francisco’s budget is “under water.” Where is the money?
We can no longer blame Proposition 13 or even the annual maximum cap of 2 percent, because these property tax limitations do not apply to resales. Properties that are sold are immediately reassessed to today’s values. If prices have increased by 21 percent, property tax revenues on these sales should go up by the same amount.
Yet the mayor and our board of supervisors are crying poverty. They are cutting back on high-profile city services, such as graffiti cleanup and pothole repairs. They are considering slashing nursing support for the elderly and making cuts at San Francisco General Hospital. They are moving the chronically disturbed into Laguna Honda to reduce costs. Yet there is silence in response to the question “Where is the money?”
City administrators may blame the depressed commercial office market as well as the declining job base since the dot-com crash. Yet last year we saw a recovery boom that continued into 2005. Vacancy rates are coming down quickly; commercial real estate sale prices have skyrocketed, with significant sales occurring in some of the largest office buildings. Job growth was roughly 6,000 last year. Where is the money?
Have you received a parking ticket recently or paid for parking in a garage? Within the last six months, traffic tickets and parking have increased by more than 10 percent. At the 4th and 5th Street Mission garage, monthly rates have gone from $225 to $250. Parking tickets have increased from $25 to $35. Where is the money?
The problem is that San Francisco is ruled by one fragmented political party. There has not been a watchdog opposition supervisor to keep real spending corruption under control since Quentin Kopp was in office. The only watchdog we have today is the Chronicle’s Matier and Ross. In recent months, the pair have exposed corruption in our assessor’s office, which likely led to the resignation of Mabel Tang. They—not local officials—have kept Julie Lee’s corruption case in the public eye.
San Francisco citizens need to demand an answer to the question “Where is the money?” In a previous article I called for the mayor and the board of supervisors to determine the value of each city department and how much money it should receive. They should implement a zero-based budgeting system, whereby each department builds an annual budget from zero every year. This would force each department to be more accountable by annually proving its worth against its cost. Today we have bloated departments that may be forced to make cuts but without any criteria to know their impact. My plan would create more efficiencies while eliminating government waste that is caused by officials who do not want the job of saying no to special interests.
We also need to become more vocal in asking “Where is the money?” We should write letters to the mayor, the board of supervisors, and local newspapers. We should force the chamber of commerce to become more vocal in getting answers. Every political organization, improvement association, and citizen group needs to demand answers to this very important question.
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Written by: Hans Hansson
Hans Hansson is President of Starboard TCN Worldwide Real Estate Services as well as a member of the Board of Directors for TCN Worldwide Real Estate. Hans has been an active broker for over 20 years in the San Francisco Bay Area and specializes in office leasing and investments. If you have any questions or comments please email email@example.com or call him at (415) 765-6897. You may also check out his website, http://www.commercialspacefinder.com/.