over the years we have not seen major changes to our business tax. since to them and what we had a real estate transfer tax that has been applied but we have seen tax increases that have happened to our business community. we have seen incredible fee increases that have hit. -- have hit businesses large and small. the fee increases are the things that have had the most detrimental effect on the business climate in san francisco rather than a business tax in general. we have seen those every year. as fee increases the board has to either prove or we have to not approve and find the money to replace the fees. that is a hard thing to do. revenue generating can limit -- we can go forward on fee increases in the future. that is of the gatt would like to engage with the small business commission to see how we can roll back some of the fees that have been hit on a lot of our small mom-and-pop businesses.

we can look at rolling back fees instead. i have here when page that discusses the main differences between the mayor's proposal and the proposal that come from them members of the board of supervisors. they are the same pretty much and the presenter from the comptroller's office will discuss the main parts of this. i want to make sure you have this highlighted before you. ours is different in that our measure is silent on the current exemptions that were enacted over the past couple of years, the mid market petrol tax exemption, the biotech exemption, and the green tech exemptions that were done, renewed last year and the enterprise zone exemption. my measure is silent. i was asked whether i wanted to have language that would forever eliminate the possibility of having these exemptions go forward. my measure should be silent on that and we will go through the democratic process to decide how we're going to continue or not

continue this measures. that is something that is up before the board of supervisors about what to do about those exemptions. i imagine that as part of the discussion we can have with the mayor's office about how these revenue generators can go forward through these exemptions. also you see the scale of how we are applying the registration fee. hours differs from the mayor in that our field -- our fees are smaller. you do not see a major bump up until the business has a gross receipts tax of over $25 million. that is making sure that we are enabling some benefits for smaller businesses. businesses that are the lifeblood of san francisco. they're getting the most benefit from this measure. i want to highlight that for you

and thank you for your consideration. i cannot stay here the whole time but i appreciate your weighing in on this measure and ultimately, i am hoping that we do not have two competing measures. that we have one measure that goes forward to the ballot that has the support of the majority if not all the members of the board and the mayor's support. that is the kind of grouping that we need to have for this measure to be successful and i look forward to working with you on it when we do come to that agreement. >> how much time do you have? supervisor avalos: i could probably stay here until 2:40 p.m. at the latest. >> will be able to have the presentations and there might still be time. i wanted to make sure there was time for both -- for questions about supervisors. president adams: jason elliott from the mayor's office.

think you for taking the time to consider these two important measures. i want to pile on and say things as well on behalf of the mayor to jay and ted egan and the comptroller for all the work they have done for many months and many hundreds of hours and analysis and through some complicated issues so the mayor spinks is extended to the comptroller's office. -- the mayor's thanks is extended to the comptroller's office. i also largely on behalf of the mayor agree with most of what supervisor avalos said. he accurately characterized both measures, the importance for business tax reform and the differences are subtle but important between our measure and a measure that he and his co-sponsors put forward. before i talk about what makes them different, i want to

reemphasize and underlined the -- this is about removing a tax on jobs and there is no group of commissioners or people more conversant in the importance of doing that which is removing the tax on jobs. we have as has been stated the only kind of tax on payrolls. in the state. we need to move away from that system and i appreciate the leadership over the last several years on moving the conversation for. it is not easy conversation. it is complicated. we're still finding new questions. underlining that this is about removing the tax on jobs and making us more competitive, i would turn for a moment to what makes the measures different. i will speak to what ours is. ours is a product of a long consensus effort we've undertook with many different people in

the business community. this body is very well versed in the fact that the business community is not monolithic. and when you say the business community support something, that includes a lot of different kinds of people. i think that is important to underline and i know other folks will speak for the business community. it is not monolithic. the mayor did convene a number of meetings over several months to talk to the business community about why we were trying to do what we were trying to do. we're now at a point where we are proposing a $13 million positive measure. as supervisor avalos characterized it. they are the same absent is one important difference in biotech but they are largely the same. i will speak to what ours is. it is a $30 million positive measure and we have been open about saying that $13 million,

we're raising for the explicit purpose and the cooperation of the business community to fund the housing trust fund which is another initiative that the mayor along with a number of supervisors, including several of those sitting behind me, are working toward that goal together. that $13 million is -- not tied to it in terms of the ballot language, we're talking about those as companion measures. it is important to us as we move forward with the consensus that we have the buy and of the folks that are working with this all along. -- buy in of the folks that are working with us all along. folks have not said status quo is better. that is to their credit. we have arrived at this point where we're here. the issues about mid market exemptions and biotech is

important. jay welcome -- will address that in his presentation. what ours is is ours does extend and acknowledge directly the successful programs and wanting to continue those. i am available for several more minutes. i can hang out here for a while if there are other questions and we have people back downstairs monitoring this as well. if i have to come back, i am happy to do that as well. thank you. president adams: supervisor kim. supervisor kim: thank you. supervisor avalos already described the proposal of which i am a co-sponsor. i will not go into the details of that legislation. both revenue packages support generating revenue for the city and everyone acknowledges the business community as well. there are a number of needs that the city needs to invest in the rose as the city economy grows.

that is access to affordable housing as our workforce increases. we need more housing available for that and we're already seeing their rent crunch that we're experiencing in the city due to the growth which we all support but there are these other impacts and we do not have enough housing available for the residents that live here and our increasing work-force. we will also see increases in needs around public safety whether it is police officers on foot patrol or other types of infrastructure needs such as maintaining our streets, dpw, must another -- a number of other things. we are investing in small businesses to recognize as one of the largest engines for job growth. for variety of reasons, the school district is looking to save 13 for next school year. the school district already has

to make that difficult decision of shortening our school year by four days this past year due to state cuts. they're proposing another four days and the state may mandate another five days on top of that. the question of course is whether we can address that issue. that is 13 days less of school that our kids will be attending next year which impacts, of course, our ability to teach and help our students achieve and it means almost 2.5 weeks were our parents and community will have to figure out what to do with our school children. four are ready of reasons we're looking at one that generates revenue. -- for a variety of reasons, we're looking at one that generates revenue. i think it is important to distinguish things being an investment. it is important that we invest in our infrastructure. what i appreciate about gross receipts is it spreads that

burden to a wider universe but acknowledging that we do not want to penalize people for creating jobs which is why we're moving away from payroll tax system. i think that for anyone to say the system as it is better, i would strongly disagree with that statement. it is imperative we move to a gross receipts model. the proposal to have before you are fairly similar. the last piece i will speak to is the tax exclusion. it is important to the knowledge both proposals can get amended as we get feedback from the community. i do not want to speak for other co-sponsors of the gross receipts proposal that have been put forward by john avalos. i am open to continuing until the sunset date. i do want to declare that moving away from apparel textiles generate benefits for the businesses that generate

benefits. in the case of midmarket, what we were trying to address was a growing company that would generate jobs for the city, not penalizing them. and secondary to that, was having the move to a corridor. one of the benefits that we have seen from that is a company that has moved to a building where they have made an investment for 50, 60 years. i have talked with twitter. i think what we would like to see moving forward is what that numerically works out to. if we see a tax declined by a considerable amount, how much

would that continued to decline whatever the investment in the city may be? i have questions, but i am open to your feedback. i think all of us are available for any questions you may have. >> thank you very much. >> jay, how long is your presentation? >> 15, 20 minutes. >> i know you want to hear the presentation, but are there any specific questions you may have to supervisor avalos or supervisor kim? i just went to make sure you had an opportunity to ask the supervisor directly. >> commissioner riley?

>> the $25 million to over $100 million -- is there a study of how many businesses in the city would be affected? >> i think the comptroller would be best to answer that. the comptroller has the information. it's a minority of the people in san francisco. >> 45,000 for the 50 million and up -- >> i think these would definitely not the small businesses impacted by that. >> right. >> again, the comptroller's

office, they're the ones who helped us get to $40 million. >> i will wait. >> ok. >> this is for supervisor avalos. the $40 million? how is that going to be allocated? supervisor avalos: i am looking at this for the mayor. i think servicing businesses in downtown san francisco would be helpful, especially muni. we're looking at all hole in the -- a whole -- hole in the new budget.

we could replace it with that to cover muni costs in that would be agreed service to the downtown community, one area i am looking at. hopefully the mayor and i are in agreement on that. also, as supervisor kim pointed out, 13th furlough days are being probated for next year. the city commitment to the education fund is $15 million per year. perhaps we could be fund less of that, make sure that we are able to support working families, make sure there's not that much impact there. those are at the top of my list. also, moving forward, we are looking at how we might rollback business fees, out where we are

nickel and diming businesses. that is something i would look at with your support. no one talked about the fees. every year there are new fees. i'm seeing them over and over again. >> so, would these be special allocations or general fund? >supervisor avalos: they could be general fund. just as we are looking at the $13 million, that could go to the housing trust fund. that could be an allocation that the new tax would make happen, but it is something that we could choose for it to go. we could use for it to go to muni. we could increase the taxes for the district or both. in both cases, we would be doing

a lot to support infrastructure in our business community. >> thank you. commissiner white: supervisor avalos, has your team worked with the small business community regarding this matter? supervisor avalos: i was actually capitalizing on the role the -- the work the comptroller's office had done. the controller's office was getting a lot of input, but in -- buy-in from the community on the measure. we were discussing this for months. this is before ed lee was mayor,

and president chiu was calling for tax reform. i had met david chiu before when we were working on this. that this someone who has come out with a lot of discussion that has been public. i have been working with departments to do that out reached -- outreach for the business community concerns. >> i have one question. are you willing to work with the mayor's office to come up with one ordinance on the ballot? supervisor avalos: absolutely. >> perfect. supervisor avalos: i've been talking about that since i introduced a. i have been talking about it with the mayor for a few months. >> right. thank you. supervisor avalos: i think

consensus within our political community is going to be helpful. and also to make sure that in the future we don't just come back and try to do something new the probably a lot of people we build consensus around will like. >> thank you, supervisor. ok. i would like to invite jay with the controller's office to make a presentation. thank you, jay, for coming. >> good afternoon, commissioners. as i understand it, this

commission is familiar with the business of tax reform and i will refrain from walking you through each of the rate schedules and the schedules, unless you find useful. i can do that. i'm going to talk a little bit about where we are now, the differences between the two pieces of legislation, and i would like to talk a little bit about the outreach the controller's office is done and a high level analysis of what it means to move into gross receipts tax. we began the process of speaking to the business community and working with them to come up with a replacement for the payroll tax. and start. we issued our reports.

-- i'm sorry. we issued our report. we have an out 1. we received feedback from that on june 12. two pieces of legislation were introduced, one by the mayor and four -- and board president, and one by supervisor avalos. so, the legislation that was introduced on june 12, there are three main differences. the first difference that we discussed extensively is the registration fees. the mayor and the board president's fee structure would raise new revenue while supervisor avalos's rate

structure would raise $40 million in new revenue. the existing payroll tax exclusions would be converted to a tax credits that would be equal to the same amount as the payroll tax. and the current dates would be retained. under supervisor avalos's legislation, there are no changes, and they would be phased out. the third is the changes to the tax rate schedules. under the mayor pro proposal, the receipts would be between $1,000,000.20 $5 million with a tax rate of 3.25%. under supervisor avalos's

schedule, there will be a 3.5% rate and on up to $25 million, this is the tax rate that was most recently 5%. there are only three differences in the two pieces of legislation. so, we began this process in march. we had meetings with 10 different industry groups. and the small business group meeting, we had 25 attendees. there were a handful who did not sign in, so these are low

estimates of the people we have spoken to. we have the second round of entry proceedings. at the small business meeting, there work 10 -- there were 10 to 15. during that time, we felt that the representation of small businesses that are currently not paying the payroll tax was inadequate, so we held a special meeting for that group. so, since the introduction of legislation on june 12, we upheld two meetings. they were lightly attended, and with the second one we had a larger group interested in the issues around the technical legislation.

in total, we have heard from 200 local businesses, and of those 200 local businesses come up about 40 were small businesses. so, i'm just going to go through a quick highlight summary of our gross receipts. as you know, the rate structure of the gross receipts tax generates as much revenue as a payroll tax. the business feed is designed to generate new -- business fee is designed to generate new revenue. this is to ensure that we reach

the revenue goals that we intend to reach. the next feature is the tax rates for businesses. they are assigned or rescheduled when they file taxes. all businesses with $1 million or more will pay the lower rates on the first portion of the gross receipts, and the higher rate on the portions above $25 million. that's how the marginal tax works. i will talk a little bit about the exemptions we have any legislation. the first one is the small- business exemption.

so, if you are a business with less than $1 million, you will be excluded from pain gross receipts tax. they are exempt from the tax if they have four or less units. this is the same as it was 11 years ago. also, the residential pay the tax on building by building basis. the can exclude 50% of the receipts from rent-controlled buildings, recognizing the economics of rent-controlled buildings. we have the rent-controlled

properties that are subject to the transfer tax. nonprofits will continue to be exempt, and a number of state constitutional exemptions, too. lastly, i will talk about the high level impacts. when we look at a tax system. with the four areas keeping stability, equity, efficiency, economic impact. under the economic impact, the impact on the direct impact on jobs, and the labor and the gross receipts tax that would take away from the labor cost. take away from the labor cost. about 10 years ago, we were