Supervisor Fiona Ma: Opportunity and Job Creation

As an elected official for the Sunset District acting on citywide issues, one of the greatest challenges I see for San Francisco and our residents is our city's financial state ­ we are still recovering from a tough economy and face an unprecedented budget crisis. We need to create more opportunities for our residents and we need to improve the way the City runs. That is why I convened a Revenue Advisory Tax Panel in September 2003 ­ to bring together a coalition to study and make recommendations on improvements to our city's tax structure and on creative ideas for revenue enhancement.

Among the many suggestions put forth by the committee, one area where I saw an opportunity for immediate job creation was in relation to the city's payroll tax. One of the business sectors hardest hit by San Francisco's payroll tax is the emerging biosciences industry. The Bay Area alone hosts nearly 800 biotech companies ­ making it the world's most advanced and mature cluster in the growing industry. However, although biotechnology was born in San Francisco and the city's premier biotech research institution (UCSF) has spun off nearly 60 firms, surprisingly little of the industry calls San Francisco its home base.

Life science support businesses exist in the City, but biotech firms with a combination of lab research and business infrastructure have yet to take hold in significant numbers in San Francisco. By contrast, 10 minutes south in South San Francisco, there are 51 biotech firms reporting $2.36 billion in worldwide revenue. They pay $312 million in salaries and wages.

Because of the unique business model for the biotech industry, San Francisco's payroll tax is one of the largest hurdles for biotech companies wishing to operate in the City. Since biotech firms typically take 12 to 15 years of market research before reporting revenues, these firms usually pay very little payroll tax in almost every city in the Bay Area, except San Francisco.

In an effort to attract this very lucrative business and create new, high-paying job opportunities for the City, I have co-sponsored legislation with SF Supervisor Michela Alioto-Pier to amend the Payroll Expense Tax Ordinance to establish a tax exclusion for bioscience businesses.

The ordinance will allow any person conducting bioscience research and experimental development, operating laboratories for bioscience research or rendering bioscience services to take the exclusion for a period of 10 years.

The Biosciences Tax Exclusion Ordinance will create an incentive for bioscience businesses to make their headquarters in San Francisco. This will, in turn, bring city residents much-needed jobs and generate additional revenue. In these tough economic times we need to continue to create incentives for businesses and jobs to remain in the City, rather than drive them to other parts of the Bay Area. This ordinance is a good step in the right direction for the development of our City.

If you would like more information regarding the biosciences tax exclusion or the Revenue Advisory Tax Panel, please contact my legislative aide, Jaynry Mak, at (415) 554-7460.

Supervisor Fiona Ma represents District 4.