Tax to fund early child care in South San Francisco set for ballot

If passed, funding would go to providing free child care for children 2 1/2 to 5 years old whose parents live or work in South San Francisco, made possible by a parcel tax of $2.50 per square foot on commercial buildings larger than 25,000 square feet (primarily occupied by the city’s thriving biotech sector).

But some councilmembers, during a meeting this week, said the measure could be an overreach, potentially hampering the city’s flagship industry from which considerable revenue is already collected. The estimated revenue would be nearly half of the city’s existing general fund budget.

“Child care is a very important issue with me … I’m living it now, and I understand the struggles families are going through,” Mayor Mark Nagales said, who’s shared he relies on the city’s existing public childcare option for his two children. “But there are questions that I have.”

Proponents — including Councilmember James Colman, who helped gather signatures — have billed the tax as a progressive policy that would address gaps in existing subsidized child care, as well as increase pay for child care providers — all while affecting only the city’s wealthiest companies.

The city recently released its Childcare Master Plan, which found the waitlist for affordable child care options was often years long and the primary barriers to expanding services were workforce shortages. It additionally found lack of affordable care options often prevented parents, primarily women, from economic advancement.

Councilmembers will ultimately need to approve moving the item to the ballot, but voted to postpone doing so until next month in order to allow time for further analysis to be done.

Nagales pointed to $173 million in commercial impact fees projected to be paid to the city over the next 12 years by developers scheduled to move in, money planned to go primarily to building affordable housing.

“My concern is, I don’t know what those projections are going to be now, if this measure passes,” he said. “If I’m a biotech company interested in South San Francisco, but then this measure is passed, does it make sense to move here when I have other options, potentially in Millbrae, San Carlos, Redwood City, San Bruno? That needs to be analyzed.”

Councilmember Mark Addiego had harsher words, calling the measure a “highly flawed document.”

“It looks like a gross overtake of tax dollars from some of our most important economic providers,” he said. He indicated concern that the child care would be provided regardless of income, and to those who might work but not live in the city.

“When you suck that much money out of an industry, there’s going to be adjustments to counterbalance that, and we don’t know what those are going to be,” he said.

Responding to the comments, Chet Lexvold, a lead volunteer with the initiative, pointed to Measure HH passed in East Palo Alto in 2018, which implemented an identical tax structure and had not noticeably slowed commercial development, he said.

That measure passed with 79.5% of the vote, however, it collects less than $2 million.

He also explained that the lack of income limits was intentional.

“Study after study shows that means testing actually ends up excluding the people who need the program the most, because it creates bureaucratic hurdles,” he said.

He reported that the signature gathering process had relied on close to 100 volunteers who collected nearly 6,000 signatures without paid helpers.

“All of this is to say the people of South San Francisco are behind this measure and want to vote on it this November,” he said.

Still, Vice Mayor Buenaflor Nicolas questioned how it would fit into the city’s new child care plan, commenting that it was not just money needed to address the existing shortcomings.

“Even if we have this money but we don’t have a plan and implementation is flawed, we won’t be able to achieve the goals,” she said.

Nagales pointed out that after-school care, identified as among the most pressing needs locally, was not included in the measure’s funding. Assistant City Manager Sharon Ranals said that while the measure would allow for excess funding to go to after school programming, preliminary analysis indicated there would not be left over revenue.

She said that aspects of the measure were “probably deliberately flexible or unclear,” something that could limit the scope of the city’s forthcoming analysis.

Adding to his concerns, Addiego also took aim at Coleman, who had minimal comments on the matter during the council’s meeting.

“I think the greatest disappointment is that a colleague of ours never brought this to the attention of his City Council,” Addiego said. “This newly elected colleague never brought it up so that we could have discussions and incorporate it into what we were trying to achieve.”

The council plans to meet Aug. 10 to receive the city’s report, likely when a vote to approve the item for the ballot will take place. If the council elects to further postpone approval, a special election would be required.