Novato must be specific with proposed tax measure – Marin Independent Journal

Novato City Hall on Election Day, March 5, 2024. (Alan Dep/Marin Independent Journal)

The assessment of Novato City Hall’s budget challenges by a city financial adviser should come as no surprise to residents and business owners who have been closely monitoring the situation.

Think of the city as a household – with a very large family – talking about making ends meet.

For Novato’s “household,” the outlook is bleak.

The city plans to spend about $3 million more than its annual revenue over the next five years, if no new revenue is generated.

There are no more state and federal bailout funds to keep municipal services financially afloat.

City Hall is struggling with a persistent 6% deficit – and dwindling ’emergency’ reserves.

That comes after the city has already cut staff and services, and the dilemma sets the stage for more sustained cuts.

However, Novato residents and local businesses can expect a level of services and city programs comparable to other cities in Marin.

At a recent City Council meeting, financial adviser Andy Heath gave city leaders a sobering assessment of the city’s fiscal future, calling the deficit “systemic.”

The city is expected to spend more than it brings in. That has been Novato’s fiscal pattern for the past five years, with the city tapping into its disaster relief fund to cover the shortfall.

Financially, the city cannot maintain this pattern.

City Hall has said the same thing. The civilian grand jury’s look at the city’s finances came to a similar conclusion, while also noting the city’s problems stemming from staff turnover in the finance department.

These warnings set the stage for the city to ask voters to approve a local sales tax increase. Novato has one of the lowest sales taxes in Marin — 8.5%. Most cities in Marin are at 9%.

The sales tax in San Rafael, Marin’s largest city and a comparable city in size and commerce, is 9.25%. In 2020, San Rafael voters approved a nine-year increase in the local sales tax.

The deadline requires the city to go back to voters to discuss extending the tax and give voters a chance to weigh in on how the city spends the revenue.

A voter survey commissioned by the Novato City Council found strong support among voters (57.4%) for raising the sales tax to San Rafael levels, an estimated $10 million-plus annual revenue.

The city needs to respect the fact that they are asking Novato residents to raise their taxes at a time when they are dealing with inflation. Their grocery bills have gone up. Electricity and water costs have gone up. And filling up a gas tank costs a lot more.

In comparison, the proposed increase in sales tax will be less painful.

In 2010, Novato voters were asked to renew the city’s sales tax, but cut it by a quarter cent. Voters overwhelmingly—73 percent—renewed the tax, but the cut laid the groundwork for the budget woes the city has faced in recent years.