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November 6, 2018 — California General Election
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County

City and County of San Francisco
Proposition E - 2/3 Approval Required

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Election Results

Passing

258,343 votes yes (75.12%)

85,585 votes no (24.88%)

Shall the City annually distribute up to 1.5% of the current base hotel tax for specific arts and cultural purposes, without increasing the existing hotel tax?

What is this proposal?

Pros & Cons — Unbiased explanation with arguments for and against

Information provided by League of Women Voters of San Francisco

The Question

Shall the City’s Business Tax and Regulations Code be amended to dedicate 1.5% of the current 14% hotel tax for specific arts and cultural purposes?

 

Note: This Pro/Con information is also available in Spanish.

The Situation

The City imposes a hotel tax on the rental of hotel rooms. For most of its existence since 1961, the tax has dedicated the money raised to City arts agencies and departments, the City’s convention facilities, and low-income housing. However, starting in the early 2000s, the City began amending those allocations as part of the General Fund.

San Francisco currently imposes a 14% hotel tax (an 8% base tax and an additional 6% tax surcharge) on the rental of hotel rooms.  These tax revenues go into the General Fund, and the Board of Supervisors and the Mayor may allocate the money for any public purpose.

Currently, there are no specific amounts funding for The Arts Commission, Cultural Equity Endowment Fund, Grants for the Arts Program, and the City’s War Memorial and Performing Arts Center (War Memorial complex) consisting of the War Memorial Opera House, Davies Symphony Hall, Herbst Theatre, the Green Room and Zellerbach Rehearsal Hall.

The Proposal

In each fiscal year, the City would be required to make a distribution of set dollar amounts for these designated arts and cultural uses (dollar amounts change subject to receipt of tax revenues):

  • $16.3 million to support nonprofit cultural organizations;
  • $6.4 million for programs related to the Cultural Equity Endowment;
  • $3.8 million to support City-owned community cultural centers;
  • $3 million to support communities working to maintain cultural heritage in City neighborhoods;
  • $2.5 million to address needs in the arts community, as determined by a cultural services allocation plan.

 

After all distributions have been made for a fiscal year, any remaining funds would go to the General Fund.

A “YES” Vote Means: You want the City to distribute up to 1.5% of the current base hotel tax for specific arts and cultural purposes.

A “NO” Vote Means: You do not want to make these changes.

Supporters say

  • This measure is not a tax increase, but is a fiscally-responsible approach to protecting and expanding arts and culture in San Francisco.
  • Over the years, the arts in San Francisco have lost tens of millions of dollars of funding as our economy has soared. The measure would dedicate funding to enhance arts and music programs in schools and make art more accessible and affordable to local residents.
  • This measure will ensure local residents have more access to arts and music programs in schools and make art more accessible and affordable. It will help local artists and programs, ensuring homegrown talent can continue to thrive in San Francisco. Federal funds for the arts may be eliminated. We must act locally.

Opponents say

  • Today's hotel tax revenue goes towards the General Fund, allowing for flexibility in spending based on the City’s most stressing needs such as public safety, education and infrastructure developments.
  • The issue is not support for the arts but government subsidy. Prop E would reduce the City's budget across all other services, creating pressure for near-term tax hikes.
  • Government subsidies can only harm our vibrant art scene. The City's art scene should depend upon individuals, not public officials making judgments.

Measure Details — Official information about this measure

YES vote means

A "YES" Vote Means: If you vote "yes," you want The City to distribute up to 1.5 percent of the current base hotel tax for specific arts and cultural purposes.

NO vote means

A "NO" Vote Means: If you vote "no," you do not want The City to make this distribution.

Summary

Ballot Simplification Committee

The Way It Is Now: The City currently imposes a hotel tax on the rental of hotel rooms. The tax is 14 percent (an 8 percent base tax and a 6 percent tax surcharge). The tax goes into the General Fund, and the Board of Supervisors and the Mayor may allocate the money for any public purpose.

The Arts Commission is a City agency that receives money from the General Fund. The Arts Commission:

• Funds arts programs for youth, community and arts education;

• Approves designs of City-owned structures;

• Oversees City-owned cultural centers; and

• Selects art for City buildings and public spaces.

In addition to funding the Arts Commission, The City runs other programs that fund nonprofit organizations to support arts activities and help neighborhoods maintain their unique cultural heritage.

The Proposal: Proposition E would distribute up to 1.5 percent of the money raised from the current 8 percent base hotel tax for specified arts and cultural purposes. It would not change the hotel tax rate of 14 percent.

In each fiscal year, it would require The City to make a distribution of set dollar amounts for these designated arts and cultural uses:

• $16.3 million to support nonprofit cultural organizations;

• $6.4 million for programs related to the Cultural Equity Endowment;

• $3.8 million to support City-owned community cultural centers;

• $3 million to support communities working to maintain cultural heritage in City neighborhoods; and

• $2.5 million to address needs in the arts community, as determined by a cultural services allocation plan.

Dollar amounts will change subject to the receipt of tax revenues.

After all of these distributions have been made for a fiscal year, any remaining portion of the funds would go into the General Fund. 

Financial effect

City Controller Ben Rosenfield

City Controller Ben Rosenfield has issued the following statement on the fiscal impact of Proposition E:

Should the proposed amendment be approved by the voters, in my opinion, it would have a significant impact on the cost of government. The measure dedicates a portion of the City’s hotel tax revenue which is currently available for any public purpose to specific arts and cultural services. As these funds are shifted to these purposes, they would not be available to support other City spending.

The hotel tax currently generates approximately $370 million that is available for any governmental purpose. The proposed amendment would allocate approximately eight percent of total hotel tax revenue to specified arts and cultural services. The City currently allocates General Fund revenues to many of these same purposes. When compared to these current spending levels, $22.4 million in fiscal year (FY) 2017–18, funds allocated to the uses specified in the amendment would grow by approximately $5 million in FY 2018– 19, increasing to approximately $13 million in FY 2021–22.

As these funds are shifted to these purposes, they would not be available to support other City spending. This shift includes approximately $5 million annually from the City’s general discretionary budget and approximately $8 million from funding requirements previously adopted by the voters for public transit, youth services, libraries, schools, and other services.

Published Arguments — Arguments for and against the ballot measure

Who supports or opposes this measure?

Yes on Proposition E

Organizations (5)

Elected & Appointed Officials (1)

No on Proposition E
Organizations (0)
Elected & Appointed Officials (0)

More information

Opinions & Analysis (1)

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