there are 11 ayes. supervisor chiu: those items are passed and the resolution is adopted. item 12. >> item 12 -- item amending the san francisco business and tax regulations code article 12-8 by adding that section 906.5 to permit apparel expense tax exclusion for small business net new payroll for years 2012 through 2015. >> last week i made a call to delay this vote on this tax exemption.

i did so because voting in favor of it at this time when the budget has been passed on from the mayor to the board of supervisors, to approve this measure would create eight efficent according to the controller. i have heard or between $1.5 million and $2 million. that would be revenue we would be for going afford to improve a payroll tax exemption. ipad -- i have real concerns about whether we should make that type of decision when we are looking at our budget priorities. i would rather start a discussion about what the budget priorities are going to be while -- starting at 0 rather than starting at -$2 million. we also have a gross receipts package that would transition our business tax to a gross

receipts tax with a small business tax exemption of $1 million. we are actually moving a forward changes to the business tax that are going to make this exemption not as important in the coming years. also, if we were to approve this business tax measure, the businesses that would benefit from it would not be paying their payroll tax until february of next year. if we were to actually play this vote until november -- i'm trying to get online to look at when we have in november, the 13th or the 20 s, if the clerk could help me with that day, that regrate. we can vote on this measure knowing whether we have passed the gross receipts tax with a

small business tax exemption and that is a way of looking at our business tax and exemptions and a much fairer way because it looks at the exemptions -- we're limiting taxes for small businesses and increasing taxes for large businesses that have the ability to pay, so i would like to think we could delay this vote, colleagues you have expressed in your position on this measure by voting in favor of it 10-one, so it seems like businesses can anticipate there will be getting a business tax exemption based on whether we approve this in november were prove it today, there is no difference on when they are going to be paying the tax, there for a delay is not going to matter. we have indicated we are supportive as a body and they can benefit from the tax and hire people expecting they will get a break in the next year's

business tax. that is my motion -- that's we can have a delay on the second reading of this measure until november 20 of this year. supervisor chiu: supervisor avalos has made a motion and a supervisor olague has seconded it. >> this is the result of lots and lots of outreach in san francisco both in my office and my district in particular. months and months of hard work and the final provisions were made in collaboration with a number of community stakeholders, not only are small businesses, but it will ensure

there is no wage theft going on. the boat -- the vote was unanimous and we voted 10-1 last week to make it happen. i appreciate the comments. he was the only supervisor to vote against it last week and i appreciate the fact he is attempting to delay or overturn this legislation. but this is the exact same reason we should support this now. it should become effective immediately. we have a massive unemployment rate in san francisco, hovering at about 7.5%. thanks in part to the policies we have implemented in at city hall. we have tens of thousands of san franciscans out of work. we have tax incentives that we did for bed market regarding stock options but we have not done anything for our small

business community. this is a statement that we support our small business community. this legislation is set to take effect right away. we want to create jobs now. if we delay this until november, we are kicking the can down the road saying to unemployed san franciscans, we support this policy but not until a future date when it's convenient for us. we should focus on them first and not us. second, any gross receipts legislation does not take effect until 2014. delaying until november makes 0 cents. at a minimum, of gross receipts are on the ballot, which i am confident they will be in one form or another, it will not take effect until 2014. that means this legislation and incentive for small businesses to put san franciscans back to work will have a year and half of affect. we want to create jobs and supporter small business

committee now, not kick the can down the road. as we have all stated, whether in the budget process or out of the budget process, it's a statement of our policies here at the board. i will stand with people here in san francisco that are unemployed right now. i stand with them as they look for work and look for city hall to help them and i choose to stand with our small business community and i hope you do the same today. supervisor chiu: i have a question -- i think one concerned a number of us have had is that in the context of the upcoming budget discussions, this particular measure, if it ends up passing, will not impact of the work we do in the coming weeks. i know this has been raised whether we get the board but

have to specifically replace the money come potentially $2 million, that this might cost in the next year. could you respond to that? >> thank you. if this legislation were to pass, something the mayor has indicated his support for for quite awhile now, he understands that a supervisor farrell and the co-sponsors have been promoting this policy change for a while and the mayor has indicated his support for this. if it did pass today, the mayor would eagerly signed and work with the board to ensure it was appropriately funded through added tax or other means. supervisor chiu: 1 they now want to state and i understand my comment is that we have some work -- one thing that i want to state -- i don't think that has factored into the conversation -- i hope and understand that

there will be additional work to ensure this it can be supported through means beyond what we will have to be doing from the ad back process. i very much hope and i am optimistic we will be able to come to agree to run the gross receipts proposal and will offer to the voters in november and assuming it passes, ultimately, this particular policy measure which i completely understand right now in the context of our current business payroll will be an issue that hopefully will not be as important to address after november. that said, it's important for me to know that the work the budget committee will be doing will be additionally burdened by that and because of that, i will continue the support i have indicated last week with my vote and i want to thank our colleagues for the discussion.

supervisor campos: thank you, mr. chairman. i appreciate the comments and i don't necessarily think this is out be eaten -- this is about being with or not with the unemployed 7 siskins. -- unemployed at san franciscans. i'm proud as a progressive supervisor to be supporting this piece of legislation because i do believe this legislation is about equity. i know that many of us have had this debate about whether or not a tax break actually works and the efficacy of that kind of proposal and quite frankly i don't know what the right answer ultimately yes. i think it depends on the proposal. for me, this is about the issue of fairness. in the last couple of years, this board of supervisors has taken different steps to provide tax breaks to a number of

companies, twitter is certainly at the top of that list. last year, a number of us voted to accept from a payroll tax stock options that companies and many employees are benefiting from. this is something that allows multi millionaires because of companies being a public from having to pay a payroll tax. for me, as a matter of fairness, we need to do something for our small businesses. this legislation recognizes that you have to narrowly tailor any kind of break of this type, which is why the focus is on new payroll, know a new employees, but -- not only to employees but any -- i am going to vote against this continuance respectfully. i understand worse supervisor avalos is coming from and we

have -- we need to make it clear to our micro businesses that are the ones who ultimately create jobs in our neighborhoods that we are committed as a matter of fairness to give them a break. that is why i will respectfully be voting against the continuance. this is the right thing to do and i respect the fact at that other colleagues may feel it is appropriate to wait until after the election, but this commitment is not real until there is a final vote which is why will be voting against a continuous -- continuance today. supervisor kim: thank you. as we look at the budget, it is unclear what savings we will have moving forward. i did not really appreciate we might have to include an

additional $2 million of ad backs for this payroll exclusion which i do support, for the same reason supervisor campos articulated. we have put it forth to generate jobs and i appreciate what this has done for net new jobs as well. we are specifically rewarding a generation of new jobs for the city. i'm not even sure if there is support. if there's a continuance rather than moving it to after the elections, that we move it to our budget determinations' next week. for me, it is not my support, i just want to be reasonably secure we have the dollars allocated to do that. we do have some large ticket items on the mayor's proposed budget which is there to benefit small businesses. i want to be able to weigh all of those decisions together for another week. i completely understand where the authors are coming from.

i think we absolutely want to support our small businesses and i philosophically stand behind my vote last week as well. i just want to make sure we are being responsible that we actually have the funds to do this because i think it is unclear what savings we're going to be able to find the next two weeks and i know there is a number of things supervisors are hoping to restore funding for that we have had cut a over the last couple of years. >> is that and other motion to continue? >> -- supervisor kim: i guess that is a continuance of the two weeks -- and not sure when our first meeting in july is. >> july 10. >> supervisor kim has made a

motion. is there a second? seeing a nun -- supervisor campos has seconded that motion. i think we take the first motion. supervisor cohen: -- the motion to continue until july 10 is a motion on the floor. supervisor cohen: i appreciate your bringing the attention -- i appreciate the comments in terms of articulating the mayor's priority. i want to make sure i understood correctly that is the mayor's party to stand by this

legislation and find the dollars needed, is that correct? >> of the mayor has been a longtime supporter since supervisor farrell brought this up a number of months ago. the budget committee still has decisions to make. if it comes to our desk and it comes to the point where we need to work with the chair, the mayor is willing to do that to find other means, but there is an ad that process that would occur first. >> thank you very much. supervisor avalos: i appreciate the second motion. i believe that is something i can support. it is consistent with looking at the entirety of the budget. just a little bit -- i probably will not be supporting the small business tax exemption. i do have concerns about whether

these exemptions truly work and whether submitting an exemption to the treasurer's office is something a lot of small businesses feel is worth their while. there have been a lot of studies about small business tax exemptions around the country, and it is anecdotal at best whether or not they work. there have been a lot of suggestions that exemptions have worked in terms of biotech and mid market. who knows? certainly you could make a strong case. you could make a case the other way as well. we have done all lot in san francisco to support the biotech industry. we have a zone that has been built to support a lot of biotech work. prior to the mid market exemption, i received a number of land use and exemptions that had been supportive of small businesses as well. there are things we had done

prior to the business tax break we did last year that are supporting small businesses, and i don't think anyone has a premium on being the champion of jobs here in a san francisco, to say that you stand at more than anyone else, i think all of us have had a strong focus on job creation in san francisco and we need to stand together because people are expecting that of us as people to make policy here in san francisco. the idea that we have to put something special in this legislation that says we're going to follow our laws whether we pay people effectively or not is a necessary. we don't need to do it because of the law and we should expect people to follow the law. i appreciate that we may have a pause before we approve this and

try to figure out what the budget is going to look like and i appreciate my colleagues supporting us on having a slight delay. i totally understand where people are coming from that this could be a way to support jobs and small businesses. if i were to go to my district and talk to property owners and say if they would like to have a property tax break, probably 100% would say yes. trying to get a small business tax exemption is just a matter of talking to small businesses and they would all say they would like to have a small business tax exemption. i think a better way of supporting small businesses is looking back over the past five years at all of the fee increases we put on small businesses and roll those back. that would be the most effective way to support small business and san francisco rather than

give a tax exemption moving forward. i talked to a lot of businesses last year and they talked about the fees. when we raised fees over the past five or six years, we were raising taxes on small business. that is where we want to do the most effective -- effective work. i'm going to ask for a summary of all the fees that have been approved by the mayor and board of supervisors of the past six years and we can talk about rolling us back and that will be the most effective thing we can do to support small business here in san francisco. >> -- supervisor chu: i would like to thank everybody for the spirited debate on this. i had expected we would have a motion today on whether or not to continue this item. given our conversation that the budget committee yesterday, i did give all lot of thought and

i will actually not be supporting a continuance and i want to explain why. i think one of the areas that's important to me is the fact you are signalling to small businesses that there is immediate relief that is coming. i know this conversation has gotten tied up with the gross receipts tax and payroll tax issue but the gross receipts tax, we are not going to hear about that until november and if we do, small businesses will not feel any relief until 2015. i think it is a matter of telling businesses right now that we are going to give you a payroll tax exemption and you are not going to have to pay a certain level of payroll tax beginning this coming year. this is about to immediately signaling we will be providing a small business tax exemption to you. for small businesses on the edge -- and i know this as i have gone on walks and talk to many of the businesses, they want to

know what can be done right now to keep my business moving. that is one of the reasons we will be supporting it. i think there were conversations around whether this was actually a duplication in services being provided. the mayor's budget office has provided a budget that includes a certain level of investment in the neighborhood a commercial corridors. they have proposed something called invest in neighborhoods and proposed an additional $2 million in loans going out to small businesses, but i want to caution those programs are not up and running. it is only going to be impacting a very small number of businesses. the programs are targeted to very specific corridors in our cities, so at the very most, we are going to touch 11 commercial corridors as opposed to this

exemption which would immediately hit 30,000 businesses that make up the small business constituency, all of them whether or not they are in these never a commercial areas. i do not think these are duplication of services. the loan programs only help businesses applying for loans as opposed to this program really helping every single small business no matter where you are and whether you are lucky enough to be in one of those invest in the neighborhood areas. we're not really talking about a duplication of services. it's a relief for small businesses. i have heard a number of different conversations around it is it a budget priority? let's think about whether we would say this is a priority given the context of things. in this upcoming budget year, we've seen a lot of budgets coming forward. for the most part, we're not seeing a single provider being cut. we know there are potentially

state impacts coming down the pipeline. that is one area i'm very concerned with, but we are not seeing a budget of cuts in this coming year. when we are talking about priorities, this board voted 10 to one to say we support this program, so what's the harm in saying when we do have a process where we are reallocating money in our budget that 10 members of us have said this is our priorities that we would fund it? is $1.5 million an insurmountable amount of money to find? i don't think it is. and of the mayor's office would not like us to say this, but they have always included a technical adjustment reserve that can already cover the balance. i think we can fund this. 10 of us have said it's our priority. i don't think we should delay any further and we should signal to small businesses that relief is coming. that is one of the reasons i

will not be voting to continue this item. >> this is certainly an interesting discussion. as i indicated earlier, i would be against a continuance because i think it's important this item be included in this year's budget. i respect the perspectives that have been presented, and i do think one of the reasons this is important is because we had the opportunity to meet with small businesses and i thank supervisor farrell for taking the time to do that. in that context of everything that happened in city hall, that this is something that could be helpful to businesses on the fence whether or not to hire an additional person or give a person who is already employed additional hours -- for me, the comments i heard from those small business owners were important and it was not the

case that they would have supported any kind of tax break. it was important for them to make sure it was something that would actually have the intended impact and that is what we tried to craft. that said, i will support a two- week continuance because that allows us to incorporate this in the budget and out of deference to my colleagues who would like the opportunity to have that additional time, i will be supportive of that. but anything beyond that, i will not be supporting because i think it is important to send a clear message that this is a priority and we are going to make an investment. thank you. supervisor farrell: i would just say -- there's a lot to say, but to me this is about job creation for san franciscans now.

i don't understand what two weeks will get us. it's the same budget. nothing is going to change in two weeks. the mayor is not going to have a revised budget, it's going to be the same as where we are today. i appreciate it will give people more time to think about it, but we voted 10-1 last week to do this. it's about creating jobs now, here in san francisco. that is exactly where i stand and as i mentioned earlier, where we spend our money, how we allocate budgets is a reflection of our priorities and this is a huge priority of mine and i think we should do it right away. supervisor wiener: i will be voting against the continuance motion. let's look at where our budget process is right now. the mayor sent us a proposed budget that has very few cuts,

no cuts to health and human services, we have all of these police academy class is. this is a positive budget and the mayor deserves a lot of credit for having thoughtfully put it together. what we ended up seeing as soon as this budget without any kind of significant cut came to us was a immediately, understandably, people came and ford and said no cuts? here is the other 5 million. here is the other however many million because we know -- it's not a criticism of anyone. we can all go around this room and think of the multimillion- dollar wonderful expenditures we could make if we had the money. i think that is an important

dynamic to keep in mind because what's going to happen with discontinuances everyone is going to say we could do another 2 million here or another 2 million there and the point is this is a policy decision about how we want to tax our small businesses and incentivize creating jobs. in california, taxes have been somewhat disconnected from the budget process for local government because taxes and that having to go to the ballot. as we were discussing taxes and deciding what to put on the ballot, we are making policy choices. last year, during the budget process, we had a supplemental come to us to put several million dollars into public financing fund which i voted against.