bid. our lowest cost contract we had before as. i am glad our budget analyst and many others brought up important issues for the city of san francisco. i still look at the 1942 ordinance. this is something we continue to need to dialogue on. i know there have been many community advocates collecting signatures for the ballot. i have many questions about whether this is the right policy and whether this is appropriate to be in our city charter. i continue to be interested in the discussion around franchise fees, and mainly the report that came out with a laugh co. even with the amount of free services -- with lafco. even with the amount of free services, we are getting half of what other jurisdictions may be

getting through direct fees, which could range from 30% to 34%. i am really interested in continuing that conversation. i think those are separate from this contract and in front of us. i would be open to moving this forward without recommendation to the full board. i think that is a discussion which has come to a conclusion for me and we need to take a position one way or the other. supervisor mirkarimi: this discussion has been wending its way for a number of months. i was one of the outspoken members of this committee and the board of supervisors in putting a pause on the contract going forward, because i wanted us to undertake more homework to make sure that the assertions and allegations about what is

right and what is wrong with this contract be well vetted. and i believe due diligence has been done in the last few months. me and my office have hosted a number of meetings trying to make sure that some of those concerns and troublesome points that we hear did -- we hear bubble up, time to time, are addressed. independently, i would take the time and call other jurisdictions just so that comparison could be will verify. one of those issues that i spoke about was trying to use this opportunity and to leverage this opportunity of the contract before us in some way, for the city to be able to step up and be able to reanimate, reactivate

its activity at the port. it is simply a question of the confluence of this land the contract coming before us. i think it helped birthed a larger mission that many of us have been talking about for some years, as to what can we do to enhance the added role of the porch and a city-driven business. i believe it with city-driven businesses that we would be able to be partner, i think, in the whole recology scavenger/waste hauling schematic. i was hoping we might be able to arrive at something more deliverable in the short term, but after a number of discussions with the mayor's office and office of economic and workforce development, and with recology and others, i am going to hold them and the port authority and department of the

environment to their commitment they will with great thoroughness look at ways that cost effectively we may be able to insert the port in this equation. i guess it is not prime time ready now. but there is opportunity there, whether it is the barge methodology, or something open to further discussion. many people here, i think, in this audience and around the general public, certainly know me as a strong advocate on the part of the environment. in the last two decades of my activism in san francisco, i have cut my teeth on really being outspoken and trying to innovate in number of things on behalf of the environment. sometimes they have really challenged san francisco to also step up.

part of those endeavors included recology. i would sit down with them and talk about how we may be able to make some profound redress on the question of our plastics and the wasted plastics and take san francisco's green talk before -- beyond the professorial stage in a way that is meaningful. i am not going to lose sight in this discussion of what is before us, especially relative to the question of cost. there is no other jurisdiction i am aware of, and i did call quite a few, that delivers a diversion rate in the way recology does in the state of california. that is something i am not going to put on the back burner as a point that should, i think, be overlooked. it should be a front burner and observation. it is in the larger question

about cost. mayor newsom made it a point to be the so-called greenest city in our country. that comes to the cost. i think people should realize that with that added requirement of composting and throw waste hauling and diversion that is massed together that gives us that 77% diversion right, that is something we are going to have to stand tall to, realizing this does not come for free. san francisco likes to boast of green credentials. those credentials mean we are going to have to also figure out what the most cost effective delivery system is so we can rest on those laurels, knowing we are doing so in the most thorough and effective way possible. i just don't think that should be lost. in the spectrum of the next seven to 10 years, our diversion

rates are now being challenged by our ability to reach 100% diversion. there is no way we can arrive at that goal unless that partnership is retained with recology, and/or there would have to be an impressive alternative proposal by someone else that would be able to answer the question on cost and meet the high standards that we in city hall and the consumers place on recology for a non- failing service that meets all those green milestones we put up there. that is a serious scorecard for any company to try to rise to that particular standard. on the contract before us, i think the people of you but county have legitimate concerns. -- of yuba county have legitimate concerns, and we should not dismiss them as

peers, as in the electorate that pays a visit to us. i also know they are empowered by statutory authority in that county to exercise what redress they would be able to, whether it is an added cost or another level of protocol. it is not one to be implemented in san francisco, but would have to be instigated by yuba county themselves. i do not want there to be an assertion this is a one-way street. i think it is important that there be notes of the fact that we are at this interesting juncture of approving this particular contract, but that is not divorced from the larger discussion that has been ruminating for quite some time about the 1932 ordinance. perhaps it raises larger

questions. but the question does not affect the contract with us today. it is a separate question. that question itself can continue to evolve in what ever deliberation or through whatever grassroots democratic process unfolds. but the contract here before us today, i think, was an undertaking by city family, by those elected, and by the close engagement of citizenry and with recology. i think this is poised for being advanced to the full board of supervisors. chairperson chu: all right. do we have a motion? supervisor mirkarimi: i think the motion was made by supervisor kim. chairperson chu: are you making a motion to send the item with or without recommendation? supervisor kim: without recommendation. chairperson chu: for me, i am prepared to support the

contract, so i would be fine with moving it out with recommendation. do you have thoughts? supervisor mirkarimi: i would support this at the board of supervisors, but since supervisor kim articulated without recommendation, i am fine with that. but i will support this at the full board. chairperson chu: we have a motion to send this to the full board of supervisors without recommendation. we do have a second for that. i want to thank everybody for coming out and for all of the times you have come to meetings. we will move it without objection. >> have you adopted the amendment yet? chairperson chu: from my understanding from the city attorney, the changes were to the underlying facilitation department. we do not have to approve amendments, just accept them into the record. no amendment is necessary. it is accepting a change to the underlying facilitation agreement. the motion is to send the item

forward to the full board of supervisors without recommendation at this time, and we do that without objection. this is a question for the department. we have a memo from the deputy city attorney that says you would like to amend the actual legislation to show whereas the facilitation agreement includes language -- >> we would. chairperson chu: that would require an amendment of the legislation. let me read that into the record. there is a request to add an amendment that states whereas the facilitation agreement includes language to discuss further transportation alternatives and the possibility of developing new refuse handling systems at the port of san francisco.

we will send the item to the full board without recommendation as amended, without objection. thank you. colleagues, if we can actually take a motion to rescind the votes on item 6, 7, and eight, we can allow supervisor came to take a vote on those items. can we do that without objection? on item 6 and 7, can we take a motion to send those items out with recommendation? we will do that without objection. on item eight, we did amend the legislation. if we can send that item out as amended with recommendation. thank you. ok. >> item 10, ordinance amending the san francisco business and

tax regulations code and by imposing a transaction sales and use tax at the rate of 0.5% for 10 years, to be administered by the state board of equalization in accordance with division two of the california revenue and taxation code, directing submission of the tax for voter approval. supervisor mirkarimi: madam chair, i think there was some misunderstanding a little bit in the wrapping up of the landfill agreement with recology. i would recommend if we could for a second suspend item 10 and return back to item 9, rescind the boat on item 9 so that we

can, i think, accurately reflect some of the sentiments that were being reticulated here. chairperson chu: we have a motion to rescind the vote on item nine. can we do that without objection? supervisor mirkarimi: i would motion -- i think we were just learning a few things on the fly by some of the comments being shared. i would go ahead and motion we move this forward with recommendations. chairperson chu: we did amend it currently are previously. there is a motion to send the item out as amended with recommendation to the full board of supervisors. can we do that without objection? thank you very much. and we have called item 10. for that item, we do have an amendment that will be taking place today. i know that greg wagner is here to do a brief presentation on this item. to some colleagues know, with the amendment we will be required to hold a special

session, so this item will have to be continued for further public comment. >> greg wagner, mayor's budget director. i will go through briefly an overview of the proposed legislation. i am happy to discuss what we have before you today. it is a piece of legislation proposed for the november 2011 ballot. i will go through a little bit of the history and then an overview. then we can talk about, as you said, some proposed amendments. but the background is, as you know, in the state budget process over the past half year since governor brown took office -- the governor was working to extend a temporary sales tax at the state level of 1%. he was unable to do so as part

of the budget negotiations. he was not able to secure the votes in the state legislature. as a result, on july 1 the city sales tax rate fell by 1% from 9.5% to 8.5%. as we were developing our budget proposal and our five-year financial plan over the spring, and as the state budget deliberations were going on, and we are considering the potential impact of the state budget on the city, the mayor decided to make a proposal that as the state sales tax rates fell to put on the ballot a half cent sales tax that would recover half of the decline in our local sales tax rate. the upshot of this would be that instead of our sales tax falling

from 9.5% to 8.5%, it would fall to 9%. there would still be a half cent decrease in the sales tax rate. that would provide us with revenue that is called for in our revenue and would stabilize the city budget against cuts we have seen that we understand are coming in the pending months and years. because of the state constitutional requirements, this is a special tax, meaning it requires a 2/3 vote of the electorate to pass. the proposed use of this tax -- each of you in this room, i know, have heard probably one too many times the mayor talk about how he wanted his budget

proposal to represent a city that is safe, solvent, and successful. i will not belabor that for you again. but the safe aspect of that statement means two things, as the mayor discusses. it means having a solid system of public safety in the city, so that people feel physically safe against crime, fire, and emergency, but also providing the minimum level of a social safety net so people feel economically safe against catastrophe, and that they are able to have a basic level of their needs met. this proposal would dedicate the revenue from the half cent sales tax to those two types of safety. so it would be split roughly evenly between public safety programs and social safety net programs, including those for

seniors and children. it has a 10 year sunset built into this measure. there is an additional provision which i think will be the sun set on the amendments the chair looked for. we do not want to impose a half cent sales tax and then have the state come back at the last election, reimpose their 1%, and their impact is that we have an increase in our tax rate that would add an additional burden. and we are concerned about what that could mean for our recovering economy. so there is a provision in this legislation if the state extends or recomposes its 1 cent sales tax that has recently been taken off the books that hours will automatically go out of effect. it will not be operative in that situation.

that prevents us from having a sales tax that is higher than where we have been for the last 10 years. currently, the legislation would include a period of one year from the point of which the sales tax is improved. it would be tied to the state sales tax rate. as we have been discussing this proposal, i know i aspens time -- have spent time talking about this with you and the mayor. we have also spent a lot of time talking to our community about what this proposal looks like. we have had a lot of feedback that people would prefer we extend that time to provide a greater sense of certainty about what the sales tax rate will be over that time. essentially, the argument, and we heard this from the small business commission, when i presented it to them, we have

heard this from small business stakeholders, the mayor has talked to people on his merchant walks, and you have heard some feedback -- essentially, a longer window where we would extend the time where the state reimposing a sales tax would invalidate hours would provide a greater level of shorty about the sales tax rate. -- sure to -- surety for about the sales tax rate. that has to do with balance about the city certainty about revenues and what the future brings and the policy decisions that will happen. so what we have discussed in response to that is trying to come up with a middle ground where we extend that time that this tax would be tied to the state sales tax rate for some portion of its existence, so

partially extending that to read the 10-year life of this sales tax proposal. so again, the purpose of this is to provide us with some greater financial certainty, particularly with regard to the cuts we have seen and are anticipating to see in the state budget. i know you are all familiar with what a lot of those are, but some of the items on the list we have seen repeatedly over the last three to four years -- reductions to basic social safety net programs including child care. we are seeing in the current year and a new proposal to realign public safety programs. that won't mean a significant number of the new parolees will be transferred to the local probation departments. prisoners who were formerly sentenced to state prison will not be sentenced to county jail. that will impose a burden on

public safety systems throughout the city. we have also heard from the governor's office that they are anticipating a further realignment proposals in the coming years, including four other social safety net programs. lastly, we already know that based on the budget that was just approved and signed by the governor at the state level that they have balanced the budget with a condition. that condition is they have assumed a certain number of revenues would come in of the first half of the year. they are relatively aggressive assumptions that assume an economic rebound. if those revenues do not materialize, there are trigger cuts that will automatically take place and have impact on local government services. i know we have spent a lot of time thinking about our

finances, stepping back over the previous year, including our first five-year financial plan. we have two-year budgeting starting next year. we've tried to incorporate that thinking in to this proposal. we have also tried to be conscious of the fact that we have a delicate recovering economy, and we do not want to take actions that will be overly burdensome and set us back on our economic recovery that restricts our cities' ability to recover, and grow, and create jobs. he does things in mind. on the financial planning picture, as you know, in our five-year financial plan we have projected that if we take no action even as the economy recovers, we will have an $829

million general fund deficit, due primarily to growing expenditures. a significant portion of the solutions is on the expenditure side. those components include benefits, cost reduction, and pension reform, which discussed the changes to growth in the capital budget in contractor costs. a widespread attempt to share the burden of controlling the costs over a number of sectors of the city government. there is an additional piece in the five-year financial plan that calls for increasing our revenues. of our $829 million five-year financial plan deficit, about "%

of those solutions come from new revenues. -- about 12% of the solutions come from new revenues. this is one of the central pieces in our attempt to start beginning to take actions identified in the five-year financial plan to bring our budget back into structural balance. this item before you is not simply an attempt to throw a tax out there. it is part of a larger vision that includes pension and benefits reform. it includes revisiting our capital budget, controlling costs grows on other parts of the budget, and a revenue peace. it is part of a larger stretch of the mayor has committed to, and worked closely on this part of the five-year financial plan.

this would only go into effect if the state has not taken an action to restore its sales tax rate, and it will only be effective if our sales tax rate in the continues to remain below the level it has been for the past several years. just to sum up, last late this proposal would still allow us to be a half cent lower in our sales tax rate than we have been for the last couple of years, provides us some certainty against lost revenues from the state government, and given the circumstances and given that we have called for some level of revenue in the five-year financial plan, we have tried to design a proposal that would be economically responsible and will attempt to limit the impact on our economy while still providing some revenues that we need to retain for services in the city government over the next five years.

with that, i am happy to answer questions. chairperson chu: into. supervisor mirkarimi: i am a co- sponsor of this ordinance. thank you to the mayor's office for putting this forward. i think in the wake of fluctuating discussions from the state and with the governor's budget, with san francisco just putting its budget to bed, i think it is welcome in our ability to be able to assign, potentially, additional funds for public safety and human services, while doing something kind of unique. that is, while we in california are certainly experiencing the dial back of the sales tax, for a municipality to maybe have the

option of increasing its by 0.5% -- this is an opportunity to work with the small business community to be able to do so so that the impacts are well entwined in the most positive way possible. so in order to do that and to make all those variables meat well, there is an amendment we are putting forward. i will go ahead and let mr. wagner speak to the amendment if you would like, but we handed out copies. the amendment restructure's the timeline of the implementation so it is sensitive to all sides, stakeholders in this question. >> the amendment, and i have a copy so we can read it into the record if necessary -- as you say, the basic amendment