and there were people about that and no one would think of that today. and when you look at growth and transformation of the embark, the same with doyle. it will be a cherished part of the city and a worthy addition to what is there. >> it will be a safe and beautiful entrance to a spectacular beautiful city. it will be the entry to golden gate that san francisco deserves. captioned by the national captioning institute --www.ncicap.org--

supervisor avalos: good morning, welcome to the budget and finance committee. joined by my colleagues supervisor mirkarimi:, supervisor elsbernd. madam clerk, do we have any announcements? >> all persons attending this meeting are requested turn off all cell phones and pagers. if you wish to submit speaker cards, please place them in the container to your left. please submit extra copies of the bile. supervisor avalos: thank you, caller. please call our one item. >> . item number one, ordinance amending the san francisco administrative code, 106 through 106.28, to impose a wholesalers and certain other persons who

distribute or sell francisco to: 1) recover a portion of san francisco's alcohol-attributable unreimbursed health costs, and; 2) fund administration costs. supervisor avalos: thank you, madam clerk. colleagues, this is our second hearing on this item. last week i embedded amendments that we discussed that i will summarize the day. basically we had changed based on the economists' report that there is a higher level of consumption of alcohol in san francisco and alcoholic sales in san francisco, therefore the fee would not need to be as high to obtain cost recovery. we have lowered the amount by about 25%. the amendments included where we had originally had a fee based on 7.5 cents per ounce and now

that the fee is applied three ways for beer, wine, and spirits, beer would be 35 cents per gallon. why would be $1. spirits would be $3.20 per gallon. this would make a bottle of beer about 3 cents, i believe. the reason why we put three different types of alcohol, it would be easier for us to apply that fee without taking into account the different ways that alcohol can be manufactured and make it easier for the tax collector to do the work and businesses to report on their sales. the amendments, we allowed this

hearing to consider the amendments and are facing a timeline based on prop. 26, which is on the november ballot. prop 26, if it were to pass, would prevent the municipalities and state government from creating any fees in the future unless they had two-thirds of the public or the electorate. you might think that that helps to yield fiscal accountability in the county's, but it might also severely hamstring local governments from making decisions about their finances.

today, primarily we have it open for public comments. everyone that wishes to speak will be allowed to speak on the measure. i will be asking my colleagues to move this item forward to the september 7 board meeting. it will be the first one after our recess. i will be around after this week for the month of august to take in concerns. there has been a discussion about possible amendments that i will consider in the process. we will have those available for introduction on september 7. following are timeline, because of prop. 26, we would like to be able to get this to the full board and make an amendment to have that some members seventh as the first reading.

the 14th would be the day for the second reading, moving along our time line to make sure that we can improve this before the prop 26 november election date. we wanted to make sure that these folks have already considered the timeline and potential amendments that we might consider as a part of the legislative process. colleagues, and the other questions? or do we have a summary of the changes? >> good morning, supervisors. my office is prepared to present

a report on the amendments that supervisor of the los introduced last week and their economic impact. we have also modified some of the calculations from our previous report based on calculations and conversations from the initial fork and i would just like to review with you some of our new findings. as the supervisor indicated, the fees are a lower rate broken out by a gallon for beverage type. 35 cents for beer, $1 per gallon for wine. what that means in terms of the price impact of this feet on a serving of the alcoholic beverages is a 3.3 cents increase for 12 ounces of beer, 4.7 cents increase for a glass of wine.

where the changes come in our how this affects consumer spending at restaurants and bars on one hand, a grocery stores and liquor stores on the other. given that these fees represent a lower price increase, the change in consumption is lower than what we predicted or projected last time, 1% for each of the beverage types at bars and restaurants. and a grocery and liquor stores. in terms of the impact of the revised feet in kofi revenue, this is capable of expression in gallons. as i said last week, this is an uncertain figure because of our

uncertainty over the overall level lot alcohol consumption in san francisco, as well as the effect of a fee and compliance in the first year, but this is our best estimate of what we might expect to see. the ft also affects our estimate of what will happen with consumers spending and our review with outside economists found an error in calculation where last week we rectified here. the fee will actually read -- result in a decrease of spending at bars and restaurants, for a total net spending decline of establishments that sell alcohol of 13.6 million. double what we reported last time, despite the fact that the fee has gone down. however, the net economic impact is not greatly affected

by this. the reason for that is that what we reported last time is a fee revenue in the neighborhood of $20 million, declining by about $4 million in establishments to sell alcohol with the remainder of 14 million at establishments that do not sell alcohol. what would really be going on there is consumers accepting higher prices at bars, restaurants, liquor stores, grocery stores, spending more cash and sucking consumer spending out of the rest of the economy, even though 20 million of that would simply be reimbursing retailers for the fees best to wholesalers. the decline in spending at restaurants and bars, liquor stores and grocery stores, is

less than total fee revenue. the difference is just a much smaller magnitude. really, our corrected calculation is reallocated in the private sector associated with this feed. not the total economic impact. just to show the final chart here, we still project that the changes between, in this case zero jobs and 20 jobs each year, i would say that the point of view of precision in the model of neutral economic impacts, hire public-sector spending through the result of expanded revenue, which has an impact on public sector employment and private-sector contractors that work for the city and those businesses supported by city employees and their wages.

on the other hand we have the employment impact of reduced spending in restaurants, bars, liquor stores, grocery stores, and the rest of the private sector. the point was made that our assumptions about the pricing in san francisco and what consumers are willing to do in the change in prices is too small. based on national outside research it basically said how much does consumption change when you change the price? the price was made, -- the point was made, and it is a fair point, but that price sensitivity could be significantly higher because of the availability of places that were recently acceptable in the suburbs where even by of all of beverages. you would expect a bigger reduction in consumption

outside, rather than say the national level, where it might be difficult to about side of the united states. we tested the sensitivity of the results for the elasticity of demand. we said that if we tripled the assumptions, what does that do? what it does is dramatically reduce spending and revenue generated at liquor stores and grocery stores, significantly reducing the amount of consumption in those places, tilting the economic balance from neutral to slightly negative. i think that that assumption of it being triple before is very extreme. this somewhere in between. what that means uneconomic basis is that there is a decline

in spending that we project establishments that sell alcoholic beverages in san francisco. we do project job losses. will be offset, at best, with a slight loss in the neighborhood of 50 jobs with spending from consumers or if they react in a stronger sense than we would expect. i hope that these clarifications are clear to you and i am happy to take any questions. supervisor avalos: thank you, supervisor mirkarimsupervisor e? supervisor elsbernd: what is the number of jobs lost in the private sector as opposed to being retained in the public sector? >> public-sector job retention stays the same at about 60. the total private-sector job loss becomes about 100 jobs.

supervisor elsbernd: and that is the extreme example? ok, thank you. supervisor avalos: there were comments last week at the small business commission that we apply a feedback by about 5 cents for a drink. that you apply that feed at the distributor level and there will be a trickle-down effect to make 50 much higher at the ground level. some folks even express that it would be almost a $1 increase. your thoughts on that them >> i do not see the economic reason in thinking that wholesale distributors should be able to pass through more than what the fee cost them. if they could unilaterally raise costs, i would assume it would be doing that now and that right now they are basically charging

as much as they can. it costs increase by 3 cents for a drink, i can see passing on 3 cents. i do not see how they can pass more, as it is a competitive business. >> as has been expressed by many, they are concerned about the cumulative factor based on city initiatives in san francisco. i'm hearing various information or disinformation regarding impact. what would you say that? -- say to that? up >> the cumulative impact? we are simply trying to show the impact of this legislation. it is true that over the past several years and number of pieces of legislation have been

passed, either our office has showed there is a negative economic impact on certain sections of the economy, but i have not tried to add them all together. which i would need to do to answer your question by any meaningful way. i understand that point in terms of the straw breaking the camel's back, but all that we can tell you is what is the difference if you pass this or do not pass this? not the cumulative effect. supervisor mirkarimi: thank you for your work on the report. we can open it up to public comments. i have a few cards that i will be used up -- that i will read, please, in that order. [reid's namads names]

>> my name is kevin murphy. i am a high-school history teacher in daly city. we have dealt a lot of budget cuts in our school district. i have lost pay and benefits. i understand what it means when we need these services to be paid. at the same time, i have a bartender. i owned a bar with my wife in the city of san francisco. i know how small businesses are suffering in this city right now. business is declining.

i know that this service is critical, but i would like to point out three things. we have a federal system. it is the state's responsibility to tax of all. this fee is a regressive flat tax. the plump jack groups of the world, they will be able to handle this feat. but the corner store, they will not be able to handle this. the second point, san francisco has roughly the same budget as chicago. chicago is 3.5 times the size of san francisco. we cannot find $18 billion? pay for this?

i have been doing some research myself. the marin institute, which published this next study, they do not just want to charge for farm. they want to start a new prohibition. if you are a student of history, you know how that turns out. >> thank you, next speaker, please. >> my name is mike pedro and i want to talk about the impact that this will have on the youth of my community. working with youth in terms of talking about alcohol and the harms of alcohol, working with this youth group that met at 12:00 every thursday, 12 to 15 voice, we were talking about the harms of alcohol specifically

amongst young students in high school. these are the types of services that are greatly going to benefit from getting those 5 cents for a drink. that money will come back to the community. this programming is greatly needed by our youth, as we know that youth is a very vulnerable population. these types of vegetation and counselors are needed. the coordinator that i was advising got cut last semester. since june they have been in limbo. again, i would like to reiterate that this type of thing would be helpful for that type of youth

in terms of providing education in the harms about galt and preventing it. supervisor avalos: thank you. >> good morning, supervisors. i am part of a nonprofit trade association of venue owners, industry professionals, artists, and culture in our community. i operate and down with my wife a couple of small bars and nightclubs in the city. i am here today to respectfully speak against the proposed of faulty. san francisco is an experiential city, many come here to experience the legacy of fine food and drink, fascinating people, exciting food and

entertainment. this is called our culture. that culture is the engine that drives the industry. the proposed of golf he might be noble in purpose, but it will be incredibly problematic. the equally, if not important phase -- more important phase, we emphasize that the city needs money but we look beyond the fact that the hospitality and -- entertainment industry has been taxed to the breaking point. we are left with no choice but to decide whether or not to increase prices, turning away customers, or reduce our thin margins. the impact will be most acutely felt by local entertainment members, some of the hardest hit in this economic downturn.

people are coming out, but they are not staying for spending as much. 15 to $20 per head. this has happened over the past few years. the overhead associated with costs -- [bell] while the overall revenue decline. thank you for your time. supervisor avalos: thank you for your comments. next speaker, please? >> good morning, supervisors. as an alcoholic by sort -- i support a recovery fee on related accidents. for some of this money the tax code treatment facilities would be supported. i know that if i was not in treatment, in the long run i would be a financial burden on

the city of san francisco. you cannot put a price on the detriment to community individuals. supervisor avalos: next speaker, please. >> san francisco is a destination city, a tourist town. i'm not concerned about the tourist from europe, asia, or south america, it is the one right across the bay. we have noticed already a significant decrease in people from the east bay area. this is in part because of the last couple of years these cities have gotten more business friendly and developed world- class restaurants and entertainment revenues.

this proposed alcohol free to just give some of these people another reason not to come across the bridge, as unfortunately for many friends that i have in the east bay, the idea of a big night out in san francisco is not a big night out anymore. i implore the board to not allow this alcohol feed to be imposed. supervisor avalos: thank you. i will read a few more cards. [reads names ] >> thank you, i have been a

resident of san francisco for 36 years. in the long run hospitals and jails will pay the price. i am an alcoholic and now that i am in recovery, i am proud of my life. proud of where i am. >> thank you, i speaker, please. -- next speaker, breeze. -- next speaker, please. >> this is a small price to pay given the bad effects of alcohol in the world today. it will not make a big difference to pay few cents more to drink. helping with the health care costs, which are going through the roof at this time and will only get worse. thank you. supervisor avalos: thank you,

next speaker. >> good afternoon, supervisors. i am also a recovering addict. i am for this tax. i have firsthand seen the detriments to alcohol on the community. you know? people walk by homeless people on the street, asking for money for their booze. that is one thing that well, that not being able to get their alcohol. and get help. i am grateful for the treatment i am receiving. i could be any one of these people's kids. my parents are successful. has nothing to do with that. there are no boundaries. in my addiction i would come to san francisco, not caring how much money i would need to

spend. this tax is a small price to pay for helping people out. supervisor avalos: thank you. next beaker? >> thank you, supervisors. i am the executive director for the national council on alcoholism in the bay area and i also served as the chair of our public policy advocacy committee. we have been providing services to san francisco since 1957 and throughout that time have witnessed the impact of the harm caused by the over use of alcohol. excessive alcohol consumption costs the city millions of dollars each year in related costs and it is time to change the way that the city pays