We are in a fiscal crisis...full stop.

Nov 14: This article has been updated. I've added to the introductory comments. The content in Q#1-24 are the same, but they have been reordered based on input submitted to me by members of the public. One new item as beed added to the questions list (Q#7 below).

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Yes, we are in a fiscal crisis, with annual unrelenting deficits, reserves that are depleted in July 2026, and the need to accumulate $10.4M between now and July 1, 2029 in order to balance our budget and gradually build up reserves. The details are below. We will eventually have to ask voters if they are willing to support the City through a tax measure. Or we will need to reduce staff and cut services if that's what voters prefer. I've studied the numbers and pondered the options and I'm convinced that there's no way around this conclusion. 

Is our town's fiscal health worth 50 cents for every $100 dollars spent on retail and restaurant purchases in our town? That's what a 1/2% sales tax increase would mean. How about adding $300 per parcel for a partial solution? Is that better? I don't think so...

Tonight the City Council decides: 

• Is there a fiscal crisis? (5 of 5 Councilmember votes needed)
• Should a tax measure be placed on the ballot in March?
• If yes, what type of tax measure?
• A sales tax? (4 of 5 Councilmember votes needed)
• A parcel tax? (3 of 5 Councilmembers votes needed)

Note that the sales tax measure cannot move forward in March without a declaration of a fiscal emergency. The parcel tax measure does not require a declaration of a fiscal crisis.

My recommendation: Go with a 1/2% sales tax measure in March 2024. Give the voters a chance to weigh in NOW, at the first opportunity. Give them the option that solves the problem best: a 1/2% sales tax. Do it alongside the Fire Tax, offering voters the combined package that best solves the needs of Sebastopol voters.

Give the voters the respect they deserve...to solve the problems for our town...and don't delay in educating them. Allow their vote in March to be a fully informed vote. They love this town. They have supported revenue measures in the past. Trust the people of this town to do the right thing..and give them chance to speak with their votes NOW. See Let the People Speak. And don't delay!

Q#1: Can the Council impose a tax without voter approval? Answer: No, the Council does not have the authority to pass a tax. That is in the power of voters. That's the beauty of democracy! See Let the People Speak.

Q#3: To get the City to a balanced budget with a 15% reserve, how much new money is needed? Answer: $2.5M per year from 2026-2029, with a 3% annual increase, would bring us to a balanced budget and a 15% reserve by July 1, 2029. Sebastopol Deficit - Overview

Q#4: How much would a 1/2% sales tax add to purchases in Sebastopol? Answer: 50 cents for every $100 purchase ($100 x .005).

Q#5: Does a 1/2% sales tax meet our goal? Yes (with an add'l $700K needed annually beginning July 1, 2027). 1/2% Sales Tax - Does it help?

Q#6: If Sebastopol voters pass a sales tax in March 2024, will that block the Fire Tax that will be on the ballot at that time? Answer: No. A decision by Sebastopol voters to support a sales tax in March of 2024 will not block the Fire Tax.

• Sebastopol's Sales Tax is 9.25%
• The State-wide cap on Sales Tax is 10.25%
• That leaves 1% in Sales Tax for Sebastopol voters
• The Fire Tax is a 1/2% tax. 
• Sebastopol voters still have up to 1/2% of Sales Tax available to allocate.

Q#7: If the Fire Tax passes in March 2024, what impact will that have on our fiscal situation? Answer: It will help by providing $1.1M or more to our underfunded fire services. Although it will not relieve our current or projected budgetary woes, it will address the looming future need to find additional funds for our fire services. See Will the Fire Tax Help Our General Fund? 

Q#8: How much would a 1/4% sales tax add to purchases in Sebastopol? Answer: 25 cents for every $100 purchase ($100 x .0025).

• $8.9M: The amount a 1/2% sales tax would likely produce for the City through 2029-30. 

Q#9: Does a 1/4% sales tax meet our goal? No, not unless we have an add'l $1.5M annually beginning July 1, 2026. 1/4% Sales Tax - Does it help?

• $4.5M: The total amount a 1/4% sales tax would likely produce for the City through 2029-30.

Q#10: Does a $300 parcel tax meet our goal? No, not unless we have an add'l $1.5M annually beginning July 1, 2026. $300 Parcel Tax - Does it help?

• $4.5M: The total amount a $300 parcel tax would likely produce for the City through 2029-30

Q#11: Does a $250 parcel tax meet our goal? No, not unless we have an add'l $1.6M annually beginning July 1, 2026. $250 Parcel Tax - Does it help?

• $3.7M: The total amount a $250 parcel tax would likely produce for the City through 2029-30

Q#12: How much is the City's total shortfall, looking into the foreseeable future? $13.3M through July 1, 2029, at $1.5M or more each year.  See Item #3 in The Deficit - Cold Hard Facts. 

• $4.7 in cumulative deficits until July 1, 2026 ($1.7M+$1.5M+$1.6M) 
• + $8.6M in cumulative deficits next four years ($1.7M+$1.9M+$2.3M+$2.6M)
• =$13.3 in total deficits through 2029-30

Q#13: How much does the City have in current reserves to cover this $13.3M deficit? Answer: $5.1M in reserves, which will cover deficits until July 1, 2026.  See full discussion of the Reserve Balance. 

Q#14: How much will be left in reserves as of July 1, 2026, to cover our remaining 4 year cumulative $8.6M deficit? Only $400,000 will be left in reserves as of July 1, 2026 to cover the remaining $8.6M in shortfalls.  See full discussion of the Reserve Balance.

• $5.1M in reserves today
• -$4.7M used to cover our deficits until July 1, 2026
• =$400,000 remaining in reserves on July 1, 2026

Q#15: If we apply the remaining $400K in reserves to the $8.6M the City will need through July 1, 2029, how much more revenue is needed? Answer: $8.2M is needed through July 1, 2029 after we use the remaining $400K in reserves. 

• $8.6M in deficits from July 1, 2026 through fiscal year 2029-30
• Minus $400,000 still left in our reserves on July 1, 2026
• = $8.2M shortfall with no reserves

Q#16: If we raise the $8.2M needed to cover shortfalls (after the $400K is used) through July 1, 2029, is that enough to also get our reserves built up again? Answer: No. Raising the $8.2M covers the deficits only. It leaves the City with $0 in reserves as of the 2029-30 fiscal year.   

• See the answer to Q#2 above and the article The Deficit - Cold Hard Facts. 

Q#17: How much more do we need to raise in revenue in order to have a 15% reserve in 2029-30? Answer: Another $2.2M is needed to end up with a 15% reserve balance at the end of 2029-30.  

• The reserve is calculated as a percentage of expenses for any particular year.
• In 2029-30, the end of this 7 year span being considered, expenses are projected to be $14,781,697. 
• 15% of $14,781,697 is $2.2M ($2,217,255)
• See full discussion of the Reserve Balance. 

Q#18: What is the total new revenue that needs to be raised between now and July 1, 2029 to cover all deficits and leave us with a 15% reserve? $10.4M is the total we need in new revenue for a balanced budget and a healthy reserve by July 1, 2029.  

• $8.2M needed to cover our deficits ($13.3M - $5.2M in reserves now)
• + $2.2M needed to rebuild a reserves
• =$10.4M total need by July 1, 2029 for a balanced budget and health reserves

Q#19: If new revenue comes to Sebastopol beginning July 1, 2026, how much per year would be needed to get to our $10.4M goal by July 1, 2029? Answer: $2.5M per year, increasing 3% annually. See the math: Sebastopol Deficit - Overview

Q#20: What if we start receiving new revenue before July 1, 2026? How much does that change our annual needed revenue? Answer: Any amount we accumulate before July 1, 2026 lowers the per year annual amount after that date.

• Revenue from a sales tax or parcel tax measure passed in 2024 would produce $1M to $2M before July 1, 2026, reducing the amount needed in the following four years.
• See the discussions about the revenue that can be expected from these tax measures. 

Q#21: If the new hotel opens by July 1, 2026, does it help meet our goal? Yes, completely if combined with a 1/2% sales tax and partially if combined with a different tax. See article on the Hotel Revenue. 

• $4.65M: This is the amount the new hotel is projected to produce for the City through 2029-30.

Q#22: What about a possible reallocation of funds if Sebastopol consolidates with another fire district? Answer: Yes, there is a possibility of reallocation of funds as a result of consolidation, but it is too speculative to be reliable.

• See full discussion: Will the combination of Fire Tax and Consolidation help the City's Deficit?

Q#23: Does Sebastopol have the highest tax in Sonoma County? No, Petaluma and Cotati are at 9.5%. Santa Rosa and Sebastopol are at 9.25%. Healdsburg, Rohnert Park, and the City of Sonoma are at 9%.  See UUT? TOT? Sales Tax? Definitions please! for more details on taxes throughout the County. 

Q#24: Have any California cities gone bankrupt? Yes, most notably Orange County (1994), Vallejo (2008), San Bernardino (2012), Mammoth Lakes (2012), and Stockton (2012). See the articles here and here and this video.