Why San Francisco Can’t Be Fixed

The era of big government is over.

Bill Clinton, 1996 State of the Union address

Big government may have been over at the federal level in the 1990s, but in San Francisco, it was just getting started.

Over the last 25 years, SF’s city budget has mushroomed from $3 billion to $13 billion. Much of that money has flowed not just to city operations, but into the private sector. The problem now is that so many organizations are getting a cut of that money that reforming the system – for example, bringing spending in line with other cities – is probably impossible. Attempt any change, and those feeding off the gravy train will use their money, votes and influence to neutralize you.

Who are these interests? Let’s take look at a few.

The Media

It’s a stretch to say SF owns the local print media, but it’s less of a stretch every year. Since 1994, the city has allocated money for ads to newspapers around the city. This was only a small portion of a paper’s revenue during the glory days of print media, but with the decline of subscriptions and other ad revenue, city money has become increasingly important. Along with policies like requiring fictitious business notices (see pages 13 and 14 here) local government is keeping local papers afloat.

A ad paid for by the city in the Aug 21 SF Examiner

As a result, most media in the city tows the party line, rarely criticizing elected officials. To see why, consider the case of the Marina Times, which does excellent reporting on corruption in our city. As you can see by flipping its pages, the city is also the paper’s largest advertiser. So it was only a matter of time before some supervisors hatched a plan to eliminate funding for it.

Happily, The Times had enough allies on the Board that the effort failed, but not every publication is so lucky. So don’t expect much criticism from these outlets on the city or its leaders. And if you run for office on a platform of smaller government, expect to be crucified in the local print media.

Small Businesses

When Mayor Ed Lee died in 2017, the Chronicle published a heart warming piece on his love of local restaurants:

In 2012, Brenda Buenviaje of Brenda’s French Soul Food received a grant from the Mayor’s Office to upgrade the facade of her business. When the work was completed, Lee held a press conference at the restaurant to highlight the money being invested by the city to improve the Tenderloin neighborhood.

A mayor’s office handing out cash payments to businesses is hugely problematic. For one thing, it disadvantages competitors that don’t get funds. For another, it invites corruption. The mayor funnels money to your business, and at election time, you return the favor.

And the grants keep coming – Mayor Breed created $11 million more of them just last week. While these may fall under the label of “covid relief”, the conflicts of interest are there all the same.

It gets worse. Designating your company a “legacy business” means you get cash payments from the city forever. Step back and ask yourself – how could giving a taxi company this designation possibly be in the public interest? There’s no benefit, and endless scope for corruption.

Not only does the legacy business get $500 per employee per year of city funds, the landlord that leases space to them gets a payoff of $4.50 per square foot. According to the city, 7,500 businesses qualify for the subsidy, not including their landlords. Imagine running for city office on a platform to end this graft. Your opponent is sure to be flooded with votes and donations from those who benefit.

Money comes in the form of loans as well as grants. Take Yoshi’s, a branch of the famous Oakland jazz club that opened here in 2008. By 2009:

Things looked pretty bleak until last month, when the San Francisco Redevelopment Agency gave Yoshi’s – a centerpiece of the city’s ambitious plan to revive the once-swinging Fillmore District – a $1.5 million emergency loan. It came on top of a $1.3 million loan the agency gave the club in September, and the original $4.4 million long-term loan it provided to Yoshi’s to develop the 28,000-square-foot space on the ground floor of the Fillmore Heritage Center, a 12-story condo tower that also houses the 1300 on Fillmore restaurant and a small jazz museum.

SF Chronicle, Jan 10, 2009
Yoshi’s San Francisco. Now closed.

Eight million dollars. For one business! Yoshi’s went bust in 2014, and these loans were never repaid. The SFRA was actually funded by the state in this case, but the SF Board of Supervisors made the deal and authorized the funds.

Nonprofit Organizations

Donors of all gifts accepted by the City should be disclosed, and consistent with existing law, anonymous donations should be prohibited.

Sept 24, 2020 Office of the Controller report on nonprofit gifts to city employees

The city bankrolls hundreds of nonprofit organizations in what amounts to a second, shadow government. These corporations do everything from managing city-run housing to “homeless services” (a lot of those), running youth centers, managing museums, etc.

While many of these organizations may do good work, financial transparency rules for them are weaker than for the city itself, which makes them ripe for corruption. Take the nonprofit, city funded “San Francisco Parks Alliance”, for example. While it was supposed to be using city funds for services within our parks, in reality, the Department of Public Works head Mohammed Nuru used it as his personal piggy bank. This case only came to light due to a Federal investigation – local city leaders, including the mayor, who accepted a $5,600 gift from Nuru, don’t look too hard at nonprofit spending.

The point here again, is that any politician hoping to reign in these expenses is certain to be opposed by the thousands of people these entities employ.

Taxis

The City – your tax dollars – owns the taxi industry at this point. It will spend a stunning $39,300,000 on taxi services in 2021, up from $32,300,000 just 3 years before, according to the newest SFMTA budget:

I’ve written much more on the many ways the city keeps taxis afloat in the era of ride sharing. Once again, imagine you’re a politician who runs on a platform of cleaning up the MTA by getting out of the taxi business. Your opponent will quickly be awash in union money and votes.

Conclusion

As well as the interests above, anyone wanting to reform city government will be battling the city’s 40,000 well paid workers. Reform may not be impossible, but it would take a concerted effort by more people than benefit from the endless tributaries of city money flowing from its coffers.

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