Officials in San Francisco are anticipating that 15% of office workers will remain remote when the economy is predicted to stabilize in 2023, which could hinder business tax revenue.
Business tax revenue is anticipated to grow to $966.9 million in the 2023 fiscal year, up 1% from the $957.1 million from the current fiscal year.
The analysis expects revenue to hit $1 billion across each of the next three years, which is more than the pre-pandemic high of $917.9 million during the 2018-2019 fiscal year.
Additionally, sales tax revenue is predicted to grow 26.1% to $183.9 million next fiscal year with employees returning to the office and supporting surrounding businesses. However, this is still lower than the nearly $200 million per year prior to the pandemic.
San Francisco saw its unemployment rate rise to 13% during the initial onset of the pandemic. While it has seen partial recovery, many roadblocks have stood in the way of full recovery.
Thanks to improved financial health, strong commercial real estate sales, federal aid, and new tax measures, the city is optimistic about the next two years.
Jobless rates fell to 3.9% during October of 2021, but many employees remained in work-from-home conditions and have shown little interest in returning to the office, which could be harmful to local businesses and restaurants.
Now, rising cases driven by the Omicron variant are leading to more uncertainty.
“The big caveat in the report is no one can tell you the course of the pandemic,” said Michelle Allersma, director of the San Francisco Controller’s Office Budget and Analysis Division. “The pace of recovery is uncertain, given remote work, tourism and inflation.”