Petaluma City Council members on Monday will discuss asking residents to increase two local taxes — the citywide sales tax and a tax on those visiting Petaluma in local hotels.
Faced with a continuing budget shrinkage, the seven-member council could vote to put either or both tax hikes on the November ballot.
The discussion follows several tax increases that Sonoma County voters approved on the June ballot and a Petaluma initiative seeking a new parcel tax to pay for Petaluma parks that just qualified for the ballot.
Two councilwomen have pushed for tax hikes after the council passed a budget in June that cut every department about 5 percent from last year. The city has reduced its general fund spending from $48 million in 2008 to $32.5 million this year.
In that time, the reserve fund has been exhausted and about six dozen positions purged from city rolls, mostly by elminating vacant positions.
Vice Mayor Tiffany Renee said the city needs at least a half-cent increase in the city sales tax, currently at 8 percent, among the lowest in the county.
Councilwoman Teresa Barrett has supported a 2 percentage point increase in the hotel occupancy tax, which is currently 10 percent. The county’s highest is 12 percent in Rohnert Park and Windsor.
Petaluma receives about $10 million annually in sales tax revenues and about $1.35 million from the hotel tax.
Increasing the sales tax rate by a half a percent would generate another $5 million a year. A quarter-cent increase would net about $2.5 million.
Raising Petaluma’s hotel tax by to 12 percent would bring in about $270,000 more a year and would increase Petaluma’s visitor tax equal to the highest in the county.
Council members have been lukewarm in the recent past to asking voters for more money, although the approval of several school bond measures in Sonoma County on the June ballot may show local voters are receptive to at least short-term taxes.
Of 11 jurisdictions statewide that had sales tax increases on the June ballot, only one was permanent — and only that measure failed, City Manager John Brown said. Of the ones with a “sunset clause,” eight were for 5 years or less, and all were for half-a-cent increases.
In Sonoma, voters approved a half-percent sales tax increase by a wide margin.
Of the 27 parcel taxes on the ballot in California, only 14 were successful.
If the Petaluma council agrees to seek a tax increase, it would have to determine if it should be a permanent tax or temporary and for how much, and if it should be a special-purpose tax or for general purposes.
A special tax, which earmarks monies for specific purposes, would require a simple majority of the council to place on the ballot and a two-thirds vote of the electorate.
A general tax with no specific purpose must be approved by a two-thirds majority of the council and a simple majority of the electorate.
Brown recommended that if the council proceeds with a tax, that it be for general purposes. He advised that a temporary tax would be more likely pass.
Councilman Gabe Kearney said he’s not convinced voters will be receptive, especially with at least two statewide tax increases also expected to be on the ballot.
“I think people expect to have BMW values and services on a Volkswagen budget,” he said.
“But it will be hard for people to handle that many measures. By the time you get down to (the parks parcel tax) and the city sales tax, people are probably not going to vote for it.”
The cost of placing a measure on the ballot may also factor into the council’s decision. One measure would cost as much as $31,000, two measures as much as $63,000. That money would come from the general fund and wasn’t previously budgeted.
(Contact Staff Writer Lori A. Carter at 762-7297 or email@example.com.)