What Does Measure U cost?
Measure U is a local sales tax measure that would cost one-half-cent per dollar. This equates to an additional five cents per $10 of taxable sales, or 50 cents per $100. Some exemptions apply to Sales Tax, such as most groceries, prescription medicine and many medical supplies, rent, utilities, diapers, and feminine hygiene products. No taxes would apply to these exempt items. For a complete list of all the sales and use tax exemptions, please visit the California Tax Service Center at https://www.taxes.ca.gov/.
How Much Does the City Currently Receive in Sales Tax?
In the most recent fiscal year (2023/24) the City received approximately $2.2 million in sales and use taxes, out of approximately $12 million generated by local sales. These dollars are deposited into the City’s General Fund, and account for roughly 32% of General Fund revenue.
Sebastopol directly receives a small portion of the sales tax revenue generated within the City, roughly 18% of all Sales Taxes collected. The majority of Sales Tax revenue goes to the State of California and the County of Sonoma, as illustrated below:
*The 1.75% that goes to Sonoma Countywide includes amounts that go to the Sonoma County Library, the Sonoma County Transportation Authority, and Sonoma-Marin Area Rail Transportation Authority (SMART).
What is the City’s Budget and Fiscal Condition?
The projected budget for 2024-25 calls for approximately $15 million in expenditures. As of adoption of the current year fiscal budget, theCity faced a forecasted deficit of approximately $700,000.Spending at this level requires continued reductions in services.
Absent changes to further reduce costs and/or bring additional revenue into the City, that deficit is projected to grow to over $2 million annually over the next several years, impacting the City's ability to maintain services and meet its financial obligations.The City’s full budget, as well as prior year budgets, can be found online here.
What Steps Is The City Taking to Address its Structural Deficit?
The City’s current budget utilizes reserves and relies, as in prior years, on one-time increased revenues such as building permit fees, and cost-saving measures. Addressing the City’s overall financial challenges requires multiple strategies. Among these are the potential to create an Enhanced Infrastructure Financing District, negotiating the Library Lease, updating Building Fees, pursuing grants and other revenue opportunities. A detailed overview of these steps was discussed at the September 3, 2024 City Council meeting.
Did the City of Sebastopol Consider Other Options Before Deciding to Put the Sales Tax on the Ballot?
Yes. The City Council has previously considered a variety of other options and decided to not pursue them. Among the options considered were a potential Parcel Tax, Vacancy Tax on commercial buildings, expanded Business License Taxes, issuance of Municipal Bonds, Sales of City Property and others. A full review of these options and the Council’s rationale for not proceeding with them can be found on the City’s Website here.
The City held 9 Budget Committee meetings and 3 City Council meetings at which the proposed sales tax and potential alternatives were evaluated and discussed.
How Did the City Gather Community Input Prior to the Measure Being Placed on the Ballot?
The City of Sebastopol hosted public Townhall Meetings and conducted a survey and poll on Community Priorities. The results are summarized here:
https://www.cityofsebastopol.gov/sebastopol-community-priorities-survey/
The Townhall meetings included presentations given by City staff on the status of City services, its budget outlook, and the potential for a Sales Tax proposal.
The City also distributed a city-wide informational mailer to educate the public about the specific challenges facing the City and to invite the public to our Community Town Hall events.
Who Pays this Tax? Will Visitors Pay the Tax?
Measure U would apply to any taxable purchases made in the City of Sebastopol, and is paid by residents, the City’s elected officials, and tourists and visitors to the City. Measure U would ensure that out-of-town visitors pay their fair share while re-investing in our community.
What are Measure U’s Fiscal Accountability Protections?
Measure U legally requires independent financial audits as part of the City’s annual comprehensive audit, as well as oversight by the City’s elected leaders. By law, all Measure U funds must be spent locally in the City of Sebastopol, the State cannot take this funding away, and funds cannot be transferred to the County or another public agency.
When Will the Tax End?
Measure U has a “sunset date” that dictates the half cent tax would end after 12 years.
Are There Any Tasks this Measure U Will Place on Our Local Businesses?
No, local businesses are not required to do any additional work for this sales tax. It will be collected in the same manner as existing sales tax.
Are Other Cities In Sonoma County Placing Sales Tax Or Other Revenue Measures On The November Ballot?
Yes. In addition to Sebastopol's Measure U, voters in the Cities of Cloverdale and Sonoma will consider Sales Tax proposals, and voters in the City of Santa Rosa will consider a Business Tax and Transient Occupancy Tax. Note, as with Sebastopol’s Measure U, these taxes only apply in these jurisdictions and would not apply within the City of Sebastopol. A full list of measures on the ballot in Sonoma County is available here.
What if Measure U Doesn’t Pass?
If Measure U is not approved, the General Fund will not receive the approximately $1.5 million in sales tax revenues anticipated from Measure U. If the City is not able to obtain other new revenues of at least an equal amount from unknown sources, the City Council will then have to decide, as part of the budgeting process, whether to spend reserves or reduce/cut City programs and services. Without revenue increases and/or spending reductions, the City’s current financial projections estimate the City will deplete its reserves in about three years.
On November 21, 2023, the City Council declared a fiscal emergency due to the City’s long-term financial forecast.