Cash-strapped muni banking on Prop. O

Transit tax initiative opposed by downtown interests

SAN FRANCISCO, Nov. 6 -- In one of the most closely watched campaigns in San Francisco, voters must decide Tuesday whether to support a measure that would pave the way for downtown business to pay more for the Municipal Railway system.

Proposition O would authorize the city to spend as much as $300,000 to update studies on the feasibility of creating a downtown transit tax. The tax, which would apply to most downtown commercial property owners, would generate an estimated $54 million a year.

The measure has proved to be one of the most controversial items on the ballot. Downtown property owners and other opponents have raised more than $650,000 to defeat Prop. O, while supporters have raised less than one-tenth of that amount.

Opponents of Prop. O say the measure would damage the city economically. Hitting downtown property owners with another tax, they say, could encourage businesses to leave town and force landlords to pass the tax along to their tenants.

"The tax (would be) the equivalent of another month's rent for many people," said Jon Kaufman, executive vice president of Solem and Associates, the public relations firm retained by the No on O forces. "Small businesses that are more marginal are going to be especially hard hit."

Critics say Prop. O also offers no guarantee that Muni riders would get better service, since city officials could reduce the amount of general fund money that the transit system now receives.

"There's nothing in there about improving Muni," Kaufman said.

Supporters acknowledge that city leaders could wind up giving Muni less money out of the general fund. Even so, they believe the transit system will come out ahead financially if Prop. O passes.

"Proposition O offers the best and most practical way of ensuring a direct funding of Municipal Railway operations without depending directly on the general fund," said Calvin Welch, a leader in the Yes on O campaign. "If we continue to cut Muni we are going to destroy the (transit) system."

Welch says the downtown area is not paying its share for the cash- strapped Muni system. "Right now we're using the general fund to subsidize (transit) service to the most wealthy landlords in San Francisco," he said. Just how much the downtown area benefits from Muni would be determined by the study that would be funded by Prop. O.

Supporters of the measure include environmentalists, labor officials and neighborhood leaders. Opponents include downtown merchants, Mayor Jordan and members of some local Democratic clubs. Both sides say there are Muni riders in their ranks.

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