By DEREK MOORE
THE PRESS DEMOCRAT
It might not seem apparent while strolling Sonoma’s plaza or cruising its leafy side streets that the city of 10,000 is facing a fiscal emergency.
But city leaders assert that is the case, hence their rush to put a sales tax measure on the June 5 ballot. If enacted, it would represent the first tax increase in the city in 20 years.
Supporters of Measure J, which would raise Sonoma’s sales tax from 8 to 8.5 percent, say it will help the city recoup the loss of state redevelopment funds and protect essential services like pothole repairs and police.
But critics argue the city relied too much on redevelopment for routine services and is trying to make up for that with a tax measure they cast as unnecessary and unfair.
“The action of the city to hastily get it on the June ballot is unfortunate,” said August Sebastiani, a former city councilman. “When we had the time in years past to really explore this we passed on that opportunity.”
Sonoma’s sales tax now is lower than several other Sonoma County cities, including Santa Rosa, Rohnert Park and Sebastopol. The increase would add 50 cents of tax for every $100 spent in Sonoma, generating an estimated $1.07 million annually for the city’s general fund.
The last time Sonoma voters were asked to approve a city tax was in 1992, when the city’s transit occupancy tax was raised to 10 percent.
The Sonoma City Council in March unanimously voted to put the proposed sales tax on the June ballot on an emergency basis.
The decision came three months after city staff informed the council that the city’s finances were in relatively good shape, with general-fund revenues exceeding expenditures by about $84,000. The city also has reserves of about $4.5 million.
City staff say the budget picture worsened in December after the California Supreme Court upheld a decision by Gov. Jerry Brown and the Legislature to dissolve redevelopment agencies.
Sonoma was not alone in using redevelopment funds for a range of projects. Some, critics contend, had nothing to do with fixing blight, which was the intended goal of redevelopment.
City staff estimate the city’s reserves are being drawn down by $85,000 a month since Feb. 1 as a result of the loss of redevelopment funds, and the deficit could grow to $1.7 million annually. Those estimates include $800,000 the city has spent annually on street maintenance using redevelopment funds.
Councilman Tom Rouse said this week that the loss of redevelopment funds created a true fiscal crisis.
“We are already using reserves,” he said. “What we’d like to do is stop the bleeding and regain some fiscal stability.”
A 2006 city policy places restrictions on how the city can use its budget reserves. That includes 17 percent of the city’s general fund, currently $2.1 million, set aside in the event of a disaster.
Another $1.5 million is available as a temporary revenue source that can be used while an “orderly financial plan for cost-reduction” is implemented.
The remaining $900,000 in the reserve fund is set aside for special projects, including capital improvement projects of any type, updates of adopted plans and temporary service programs such as traffic enforcement.
Assistant City Manager Carol Giovanatto said the reserves are considered one-time money and “cannot sustain a long-term structural deficit.”
The ballot measure requires only a simple majority to pass because the city would not be restricted on how it spends the money.
Opponents of the tax measure say the city still has areas where it can cut from the budget, including the amount it spends on employee retirements.
Sonoma Mayor Joanne Sanders agreed with that assessment, saying the city has “a lot of work to do” with regard to cutting pension costs.
But Sanders, who is a candidate for the 5th District seat on the county Board of Supervisors, is backing the sales tax increase because of uncertainty with the city’s financial situation and loss of redevelopment funds.
“Yes, we have reserves, but I think we need to buy us some more time while the state fumbles around,” she said.
The Sonoma Valley Chamber of Commerce also has taken the unusual position of supporting the measure.
The chamber’s board of directors was persuaded by the argument that revenue generated from the tax increase would benefit local businesses by maintaining services and infrastructure.
“People like to visit Sonoma for the same reasons we like to live here,” said Jennifer Yankovich, the chamber’s executive director.
But Sebastiani said city residents are being “nickeled and dimed,” noting that they have been asked to support a number of tax measures over the years, including most recently a parcel tax increase to support Sonoma Valley Hospital.
“All these things add up,” he said.