We Built a Stronger San Francisco Economy on Smart Government Investments
By: Phil Ting
As we watch the news from the party conventions, we are hearing a new refrain – “We built that.”
As political rhetoric goes, it is hardly, “Where’s the Beef?” or even, “Bridge to the 21st Century.” What it lacks in rhetorical punch, it more than makes up for in policy weight.
Because it does make perfect sense for us to ask: “What can government do to rebuild our economy and put Californians back to work?”
A few weeks back, I released data surrounding the dramatic increase in property values in San Francisco’s South of Market and Mission Bay neighborhoods and discussed some of the policy-driven reasons behind this beneficial increase and the new tax revenues that come with it.
Our data seems to clearly show that one of the reasons this neighborhood is so economically healthy is the basic investment our state made in expanding the University of California, San Francisco a few years back. The state built a new UCSF campus in Mission Bay. And now that investment is already paying the dividend of higher tax revenues that can be used for anything – from cleaning our streets to improving our schools.
A Civic Return on Investment
As San Francisco readers know, South of Market is home to numerous condominium towers, many of which were rushed into production during the housing boom. It is exactly the kind of neighborhood around the state (and nation) that has seen dramatic price declines.
While those few families with the means to buy in this tight credit market benefit from the decline of housing values, in general most residents do not. We’ve discussed numerous times on Reset San Francisco, the economic consequences of foreclosures. And as Assessor-Recorder of San Francisco, I know that when property values stay steady or even rise gradually that’s the best trajectory for the entire city – because it keeps tax revenues steady or increasing without having to raise tax rates. And it also means more family wealth in housing values, which has traditionally been a source of economic capital for anything from starting a business to sending kids to college.
So what’s happening in San Francisco’s South of Market neighborhood that is not happening in so many similar areas seeing housing prices crash, tax revenues fall and foreclosure rates skyrocket?
What’s happening is – we built that. We invested in a new UC campus and we are now enjoying the fruits of that foresight.
We already know that an investment in higher education is one of the most productive uses possible of public funds. Just a few examples:
• For every dollar California invests in public higher education, the state will receive a net return on investment of $4.50. That’s a 450% return on investment.
• Past graduates of UC and CSU return $12 billion annually, well above the current general fund expenditures for the UC, CSU and California Community College systems combined.
• Californians with a college degree will earn $1,340,000 more in their lifetime than their peers with only a high school diploma.
• If just 2% more Californians earned AA degrees, and 1% more earned a BA/BS, our economy would grow by $20 billion, state and local tax revenue would increase by $1.2 billion a year, and 174,000 new jobs would be created.
Now the new data from San Francisco emphasizes that investment in affordable higher education facilities doesn’t just pay off in the future – it pays off quickly in terms of more vibrant economies wherever these facilities are built.
The Foundation of a Knowledge Economy
Here in San Francisco, we are seeing the return on investment in a tangible way – higher-property values, more tax revenue and more jobs. The entire Bay Area, and the entire state, will reap the dividends of the knowledge being created at this world-class institution.
As the self-proclaimed capital of the knowledge economy, it is fitting that we should be on the cutting edge of learning that will inevitably help cure diseases, generate renewable energy and apply technology to make our lives easier.
Where is that knowledge coming from? It comes from the foundation that we build with the wise investments of our state’s limited resources.
As the child of immigrant parents who graduated from a still affordable UC Berkeley, I know there are many challenges in our system of higher education that must be addressed. Starting with continuing our work to make sure that all students who work hard and succeed in school have access to an affordable higher education.
We already know that if we build more higher education facilities, the students will come. The data also shows that more jobs, more revenue and more opportunity will also come from sound investments in vital government services like excellent higher education.