What is it?

Proposition G funds additional rental subsidies for low income households. It requires the City spend $4 million in 2026, $8.25 million in 2027, and an additional 3% more per year, up to $14 million per year, even in years with a $250 million budget deficit.

In effect, Prop G makes the "Senior Operating Subsidy Program" permanently funded at a specific level, rather than being set during the normal budget cycle. It may force the city to over-fund the program in some years, and under-fund it in other years. The money in this account may only be used for subsidies for certain classes of extremely low income rental expenses.

Over the next 20 years, the total cost of Prop G is estimated to be between $161 million and $222 million.

Prop G does not modify or supplement existing funding for other programs, which are used for the construction of new subsidized units. Those programs total over $1 billion:

• Housing Trust Fund: A set-aside from the City's general budget, approximately $50 million per year
• Inclusionary Housing Program: Fees and on-site unit requirements imposed on home builders (revenue varies dramatically by year)
• Affordable housing bonds:
  • $300 million, passed in March, 2024
  • $600 million, passed in November, 2019
  • $260 million, passed in November, 2016
  • $310 million, passed in November, 2015

The City Controller also notes that the amendment does not comply with policy on how much the city can designate to , "this proposed amendment is not in compliance with a non-binding, voter-adopted city policy regarding set-asides," which comprises about $2.1 billion (30%) of the City's General Fund budget.

Why vote No?

Proposition G has a very puppies-and-rainbows title, but it is bad fiscal policy that locks the City into spending even when it has up to a $250 million budget deficit. It limits the flexibility of the City's budget and does not guarantee that the mandated funds will be adequate for any given year. Some years may have a surplus while others may have a deficit, but the City won't be able to adjust its budget to match.

The right way to fund these programs is through the regular budgeting process. Adding another mandatory budget line-item, even in years with a $250 million budget deficit is just bad economics.

However, there is an argument that this mandatory budget set-aside could increase the likelihood of receiving state and federal money for housing subsidies. Some state and federal funding sources require a predictable yearly operating budget, and Prop G may help there. However, there's nothing stopping the Mayor and Board of Supervisors from budgeting adequately in the regular budgeting process.

San Francisco is facing a critical budget deficit, partly due to poorly designed fiscal policy like Prop G, so we recommend you vote No.