SAN FRANCISCO (Reuters) - Legalizing gay marriage would provide a financial boost for San Francisco, the city’s top economist said on Thursday in a closely watched federal trial over California’s same-sex marriage ban.

Same-sex couple Elizabeth Chase (L) and Kate Baldridge stand outside the federal courthouse in San Francisco, California January 11, 2010. REUTERS/Robert Galbraith

Edmund Egan, the city’s chief economist, estimated that annual wedding-related spending would rise by $35 million in San Francisco, with an additional $2.7 million in hotel spending, if same-sex marriage were legal.

That would mean more than $2.5 million in additional city taxes, he calculated. The city would see much more in long-term effects that were difficult to quantify, he added.

“San Francisco would see an increase in sales tax revenue and an increase in property tax revenue in the future,” Egan added. “Married individuals tend to accumulate more wealth than single people.”

In November 2008 California voters passed Proposition 8, a state constitutional amendment limiting marriage to a man and a woman. The ban came just months after the state Supreme Court had legalized same-sex marriage.

The federal case, which could produce a landmark ruling and lead to an overturning of similar bans in other states, began in San Francisco this month before U.S. District Court Chief Judge Vaughn Walker.

Supporters of the ban challenged Egan’s financial estimates, arguing that a boom in weddings -- such as the one San Francisco experienced in the summer of 2008 when gay marriage briefly was made legal -- was unsustainable.

Egan also testified that married people pay lower federal taxes on average, freeing up money to spend in their home city, and they lead healthier lives.

Moreover, legalizing same-sex marriage would cut the city’s cost of taking on discrimination cases, he said.

The federal challenge, focused on the idea that marriage is a constitutional right, could take years if it winds its way to the U.S. Supreme Court.

DOLLARS AND RIGHTS

The financial side of marriage came out in the civil rights case as San Francisco rebutted the Prop 8 proponents’ case that a government benefits from restricting marriage to a man and a woman.

“What we’re saying is there is not a governmental interest. In fact there is a governmental harm” to a ban on same-sex marriage, said Chief Deputy City Attorney Therese Stewart.

Egan calculated that the average couple would save $440 per year in federal taxes by being married, and that marriage would cut the ranks of the uninsured as new spouses qualified for benefits under their husbands’ and wives’ plans.

Federal law bars spouses of same-sex partners from receiving federal marriage benefits, even in states that recognize their marriage.

That is a major bone of contention for gay rights activists who want President Barack Obama to spearhead a move to change that aspect of the federal “Defense of Marriage” law -- or repeal the entire law.