Editorial: Novato needs an airtight plan as it considers upping sales tax

Novato City Hall’s budget problems aren’t new.

They were even a topic addressed by the 2022-23 Marin County Civil Grand Jury, which labeled the city’s fiscal woes as “chronic.”

In the city’s 2024-25 budget, it is projecting $53.9 million in expenses and $48.8 million in revenues.

That’s an estimated deficit of more than $5 million, an increase of $1.7 million over this year’s fiscal gap.

The primary solution that’s been on the table for almost a decade is an increase in the city’s sales tax, raising it from a quarter percent.

Currently, Novato’s total sales tax is 8.5%, one of the lowest in Marin.

By comparison, San Rafael’s sales tax is 9.25%. In 2020, San Rafael voters passed a measure increasing the city’s portion of the sales tax to three-quarters percent.

Instead of raising Novato’s sales tax, the last time the issue was on the ballot, the council asked voters to extend the city sales tax, but lowered its portion from a half-percent to a quarter-percent.

It was passed with a large majority – 73%.

That reduction set the stage for the fiscal hand-wringing that’s been going on since.

Novato’s fiscal standing has been complicated by turnover in its finance department and costly surprises, such as having to spend $5.8 million to buy part of its Davidson Street corporation yard that it had wrongly thought it already owned.

The council has talked about going back to voters for an increase, but it has not had a strong consensus to make that move.

Meanwhile, the city faces increasing utility and pension costs and the cost of maintaining city buildings and facilities keeps growing as repairs and improvements are postponed.

The city also has an inventory of old “white elephant” buildings it should either sell or repair and put to public use.

Both options are not long-term overnight solutions to Novato’s budget problems.

Raising the local sales tax could bring in as much as $10 million per year.

The grand jury urged the council to pursue that option.

But the City Council will be putting the measure on the ballot at a time when Novato voters are feeling the financial pressure of inflation.

There’s likely no prime time to go to the voters and ask for more money, but some may be better than others.

The council has devoted time and resources to bolster public awareness about its budget and the tough choices the city faces.

Other Marin cities have pursued increasing local sales tax, often in short-term durations, providing voters with an opportunity to determine whether the proposed fiscal remedy has proven worth their investment. That puts the onus on city decision-makers to prove the additional funding makes a difference in local services, programs and improvements.

The City Council has set the stage for putting a sales tax measure on November’s ballot. It needs to advise voters what that additional revenue would pay for and the possible consequences if voters don’t pass it.

It is time for specifics. It is also time for the council to build the strong political consensus needed if it decides to put a tax measure on November’s ballot.