Council haggles overs solutions to the city’s structural deficit

Recap of the Nov. 7 City Council Meeting - plus special council meeting called for Nov. 14, 7 pm

All council members were present at the Nov. 7 Sebastopol City Council meeting, including Mayor Neysa Hinton, Vice Mayor Diana Rich, Councilmember Sandra Maurer, Councilmember Jill McLewis, and Councilmember Stephen Zollman.

Presentations and proclamations

The November 7 city council meeting got off to a heartwarming start with awards for years of service to a public works employee and three firefighters. The room was crowded with friends and family and fellow firefighters there to celebrate an astounding 100 combined years of service by fire fighters Steve Thibodeau (40 years) and brother Marc and Mike Simpson (30 years each). Former Fire Chief Jack Piccinini introduced the trio to much applause, while Public Works director Dante Del Prete lauded Erik Billing’s 10 years of service.

The council also proclaimed Nov. 12 – 19 as United Against Hate Week.

Public Comment for Items not on the agenda

Four speakers, including Sebastopol residents Barbara Lee and June Brashares and West County resident Woody Hastings, requested that the city make a proclamation or resolution requesting a ceasefire in Gaza. Linda Berg expressed her support for Israel because she feels its opponents are misogynists.

Consent Calendar

(Note: The consent calendar consists of items that are routine in nature or don’t require additional discussion, often because they’ve been discussed extensively at a previous council meeting.)

In addition to approving the minutes of past meetings, the council unanimously approved the following items on the consent calendar:

• Extension of proclamation proclaiming the existence of a Local Homeless Emergency.

• Approval of amendment of contract for City Clerk/Assistant City Manager position.

• Receipt of information regarding Caltrans directive to remove the temporary parklet at South Main Street fronting Retrograde Coffee and Sunshine Café by Dec. 31, 2023.

• Authorization of the suspension of enforcement of one-hour parking during the holiday season (Nov. 20 to Jan. 5).

• Approval of Resolution Authorizing Application for Firefighter Property (FFP) Program. The Firefighter Property Program is a Department of Defense (DoD) special program, where firefighters can get excess DoD property to be used for firefighting and emergency services.

• Adoption of resolution approving a budget amendment for Bodega Avenue Bike Lanes and Pavement Rehabilitation Phase 1 and an authorization for the city manager to approve contract change orders up to 20% of the contract amount.

Councilmember Sandra Maurer pulled one of the consent items for later discussion: an amendment to allow only in-person meetings for closed session Special Meetings and Agenda Review Committee Meetings. Unfortunately, the council meeting ran so long that there was no time left to discuss this issue, which will be pushed forward to the next council meeting on Nov. 21.

Regular Agenda: Haggling over solutions to the city’s fiscal crisis

There were only two items on the Regular Agenda but discussions of the first one—a report from the Budget Committee on revenue enhancements—took up the entire evening. (The second item, about council committee assignments, will be pushed to a future meeting.)

Last month the council received a preliminary report from the Budget Committee on potential revenue enhancements. Councilmembers had many questions about that report and asked for several clarifications, which were incorporated into this new report. The report, which can be found here, examined the following options:

• increase the sales tax by half a percent;

• create a vacancy tax;

• loosen the rules on formula businesses in the downtown core;

• increase development fees;

• increase event license fees;

• increase the TOT tax (a hotel tax);

• reclaim the 2% Sonoma County Tourism allocation;

• increase the UUT (Utility User Tax); 

• selling city properties to raise cash;

• emergency medical services (EMS) reimbursement;

• increase the number of tiny homes/ADUs (though no one could explain how this would raise revenues);

• create a parcel tax.

In addition to background on each option, the report gives the opinion of Budget Committee members Zollman and Maurer, as well as a staff recommendation.

City Manager Larry McLaughlin kicked off the discussion of these items, by suggesting that the council consider adding a special meeting next week to discuss these options fully and give the city time to act if anything needed to be placed on the March 2024 ballot.

Increase the sales tax by half a percent

Despite a staff endorsement for this proposal, the council remained impossibly divided. Three council members (Rich, Zollman and Hinton) supported putting this proposal on the March 2024 ballot, when for technical electoral reasons, it would need to get a two-thirds vote to pass.

Two other council members (McLewis and Maurer) were opposed to this idea, though Maurer said she might be amenable to putting it on the November ballot, when it would need only a simple majority to pass.

“I do not support the sales tax at this time, Maurer said. “I think we can afford to wait, maybe six months until the next general election and to see whether or not the fire services tax passes. We could continue to piece together maybe smaller initiatives to raise money. I understand that sales tax is the most expedient, quickest way to raise revenue, but I think that it would be better overall to wait and not compete with the Fire Services District. I don't like the idea of putting the two measures on the ballot, and our city having a 10.25% sales tax”—the highest in the county—"does not sit well with me.”

Councilmember McLewis seemed to see this financial reckoning as payback for past council errors.

“We all have to learn from our mistakes,” she said. “I've sat and watched the council meetings for years. And I've seen a lot of spending and approval of different items that just didn't seem to make a lot of sense to me, and as I look at this, I just don’t feel that we’ve had a meeting of the minds with the council members… And as frustrating as it may be for everyone, I'm just adamant that we have to come together and have a goal-setting meeting where we can all at least discuss and figure this out…We haven't even discussed how would this money be spent.”

As a business owner, McLewis said she also opposed the sales tax on the grounds that it was bad for business.

Mayor Hinton noted a half-a-percent sales tax would add 50 cents to a hundred dollar purchase. If both the Fire District sales tax measure and a Sebastopol sales tax increase passed on the March ballot, that would add $1 on a hundred dollar purchase.

Councilmember Rich saw a sales tax increase as a chance to save the city from bankruptcy a few years down the road—which is the path the city is currently on. “I am going to come out strongly and recognize for purposes of this Council, and the public and anyone who wants to listen that we are in a fiscal crisis. I am not going to be that person who decides to wait …or who decides that it's better to see if certain amounts might come in... I've looked deeply into the budget. I've analyzed all of these numbers. Our problem is now. Blaming what might have come before doesn't solve our problem for our citizens at all. Delaying it doesn't solve the problem.”

Councilmember Zollman agreed. “The sales tax is going to be the largest bang for our buck…and it would definitely provide us with money that we desperately need,” he said.

Hinton echoed these sentiments.

But Maurer and McLewis remained unmoved.

Since it would require a two-thirds majority of the council to put this proposal on the March ballot, by the end of the evening it was clear that, unless either Maurer or McLewis change her mind, the proposal to run a ballot measure in March to increase the sales tax by half-a-percent is dead in the water.  

Thumbs up, thumbs down on an array of options

After a discussion of each option on the list of revenue enhancements, the council decided to give a quick thumbs up or thumbs down to winnow down the list to the most realistic and effective options.

They gave a thumbs down to the following options, mostly because they wouldn’t raise enough money or because they would actively discourage business activity the town desperately needs: revising the city’s ban on  formula businesses downtown; raising development fees; increasing the TOT (or hotel) tax; reclaiming Sonoma Tourism funds; increasing the UUT tax; selling city properties; and increasing the number of tiny homes. (Again, everyone looked perplexed about how this last one had even gotten on the list).

That left the following options still standing, to which the council (at least a majority of them) gave a thumbs up:

• half-a-percent sales tax  (though now unlikely for the March ballot);

• vacancy tax;

• event/business licenses;

• emergency medical services (EMS) reimbursement;

• parcel tax

The council also gave a couple of thumbs up to some items from a secondary list of revenue enhancement options, which weren’t explored at all in the report. This secondary list includes these items:

• review of all City-owned leases;

• municipal bonds;

• reassess trench cut and other ordinances;

• business district expansion;

• establish an Enhanced Infrastructure; Financing District (EIFD);

• revise City business license tax;

• continue to seek grant opportunities;

• cannabis tax.

The most popular of these involved asking the county for help in paying for services—like the Senior Center and the Sebastopol Community Cultural Center—which are used by a large number of west county residents who don’t live in the city proper and who therefore don’t pay local city taxes. To solve this problem, the city is working with outside legal counsel and Supervisor Lynda Hopkin’s staff to explore creating an Enhanced Infrastructure Financing District (EIFD) to raise funds to support these institutions.

Councilmember Maurer also said she’d like to have the staff explore municipal bonds and a cannabis tax.

Desperate measures: a parcel tax

Stymied in her efforts to get an increase in the sales tax put on the March ballot, Councilmember Rich suggested that the city consider a parcel tax, calling it “last on my list.”

“It looks like the only option we have, given the opinions of the council members tonight—and I respect all of these opinions; I know that we are all acting from our hearts and our goal for the community—but the one option here that this city council could pursue on a majority vote would be a parcel tax. So the three council members who are sitting here, feeling that there is a need to address this fiscal emergency right now, we do have the opportunity to consider a parcel tax and to come back and discuss that at another meeting next week.”

“The idea of a parcel tax is last on my list,” she said. “It burdens only our people within our city limits. I think it does, in fact, create a potential problem for fire department consolidation, but my goal is to shore up this town. That is my priority. And so I have to ask my fellow city council members sitting here tonight: Do we need to look at a parcel tax in March? Do we need to consider and set of special city council meeting next week and take a look at what I see as a desperate measure?”

Councilmember Zollman concurred.

“Yes, I agree. We are in a horrible situation. I think we need to act responsibly about how we're going to potentially address it even though the outcome of all of it will be horrible. I still think we need to pursue it.”

Councilmember Maurer reiterated that imposing a parcel tax on city residents could affect the future of fire department consolidation, because residents would also have to pay a parcel tax connected to whichever fire district the city chose to consolidate with.

“I do not want our residents to have to pay double. That’s just unacceptable,” Maurer said.

Special meeting called for Tuesday, Nov. 14, at 7 pm

The council gave a unanimous thumbs up to direct staff to set up a special meeting on Tuesday, Nov. 14, at 7 pm to continue this discussion. In addition staff will return with more information on the sales tax, the parcel tax, and a cannabis tax.

Because of the tight deadline, the agenda and packet for that meeting will be posted 24 hours ahead of the meeting (the legal minimum) instead of the usual five days ahead of time. There was some argument—by McLewis and Maurer—about the lack of notice, but Assistant City Manager Mary Gourley explained that the city could begin advertising the meeting immediately.

City council and staff reports

Because of the lateness of the hour, there were no staff or council reports.

Watch the full Nov. 7 meeting here.

There is a special city council meeting scheduled to continue this discussion on Tuesday, Nov. 14, at 7 pm at the Sebastopol Youth Annex, 425 Morris St., Sebastopol.

The next regular city council will be on Tuesday, Nov. 21, at 6 pm at the Sebastopol Youth Annex, 425 Morris St., Sebastopol.