Measure U was a long time in coming

It took a full year for Sebastopol's Measure U to hit the ballot. Will it save the city?

Three months ago, at the July 16 city council meeting, the Sebastopol City Council voted unanimously to put Measure U, a 1/2 cent sales tax increase, on the ballot in November.

It had been a long time coming.

The proposal to raise the sales tax in Sebastopol by a half cent has been in the works since the spring of 2023. It was already clear by then that city finances were in deep trouble and that expenditures were outstripping revenues by more than a million dollars.

In July and August of last year, Councilmember Neysa Hinton and Mayor Diana Rich tried twice to get a sales tax measure on the ballot for the November 2023 election, but were blocked, for different reasons, by Councilmembers Jill McLewis and Sandra Maurer. Putting the measure on the ballot required a two-thirds vote, which meant that four out of the five councilmembers had to agree.

Hinton, Rich and Vice Mayor Stephen Zollman tried later to get a measure on the March 2024 ballot. That effort went down to defeat as well.

It wasn’t until another dire financial consultant’s report this spring, a poll showing that most Sebastopol residents supported the tax, and the endorsement of a sales tax increase by new city manager Don Schwartz that Maurer and McLewis voted to put the measure on the ballot in November. (Read more about what changed their minds at the end of this article.)

What Measure U would do

Here is the text of Measure U:

“Sebastopol Public Safety, Roads, City Services Measure: To maintain Sebastopol’s City services such as 911 emergency medical/police/fire response, wildfire/emergency preparedness, maintenance of streets/roads, parks/trails, library, youth and senior services, retaining/attracting local businesses; and for general government use, shall the measure establishing a ½-cent sales tax generating approximately $1,520,000 annually, terminating after 12 years, requiring audits, public spending disclosure, all funds used locally, be adopted?”

It is estimated that Measure U will bring $1.5 million into city coffers every year.

Advocates of Measure U say a half-cent sales tax will help revitalize Sebastopol and maintain the town’s necessary city services. According to the yes-on-u.com website, “This sales tax is essential for the City of Sebastopol to deliver the services residents want and need, and to maintain our aging infrastructure.”

Though sales taxes are often characterized as regressive, Measure U does offer a solution to one of Sebastopol’s most stubborn problems: though the city is funded by a portion of the property taxes of its roughly 7,500 residents, the city actually serves as a commercial and cultural hub for 50,000 people in greater west county. A sales tax allows people from outside of town who use its roads and services to help pay for them.

Measure U would cost one-half-cent per dollar, which amounts to 50 cents for every $100 you spend on taxable items, such as clothing, furniture, and most retail items, with the exception of food and prescription drugs.

“The sales tax is well-structured: with a definite end date, the impact shared by both visitors and residents, and all the funds remaining in Sebastopol, not available to the county or state,” said Mayor Diana Rich.

Where does your sales tax money go?

In the city’s 2024-25 adopted budget, the city expects to receive approximately $4.5 million in sales taxes (before Measure U). Those sales taxes go into the city’s General Fund. Right now, sales taxes account for roughly 38% of General Fund revenue. 

Sebastopol receives only a small portion of the total general sales tax revenue generated within the city, about 18%. The majority of general sales tax revenue goes to the State of California and the County of Sonoma, as illustrated below:

The funds raised by the Measure U sales tax are different—they will stay with the city of Sebastopol and, as Rich mentioned, cannot be taken by the county or the state.

The city council also recently erected some guardrails that would limit how Measure U funds can be spent. At Councilmember McLewis’s insistence, 40% of the funds must be spent on city infrastructure (roads and parks), while the remainder will be spent on police staff and fire reorganization. If there’s any money left over, it can be spent on anything else listed in the ballot measure.

A solution to the city’s budget woes?

The $1.5 million the city expects to receive from Measure U annually will help close the gap between what the city spends every year and the revenue it receives from other sources.

This year’s budget includes approximately $15 million in expenditures, which is roughly $700,000 more than the city receives in revenue. If the city doesn’t either cut costs or increase revenue, that deficit is projected to grow to over $2 million annually over the next several years.

Councilmember Neysa Hinton, who is running for her third term on the city council, noted during a recent campaign event that the city is stepping up to deal with these financial challenges.

“We are really working hard to turn things around,” she said, noting that the city has been cutting expenses, consolidating its fire department, investigating bringing in more revenue via an Enhanced Infrastructure Financing District (EIFD), and, most significantly, running the Measure U half-cent sales tax measure.

Hinton said she views Measure U as a “bridge” tax that will give the city some breathing room as it continues to tighten its belt and works to increase other revenues, such as the several million dollars in TOT taxes it expects to receive from two hotels that are currently planned for downtown.

Former Councilmember Una Glass agrees. “At the beginning of the pandemic the city had more than a 60% reserve,” she said. “This was money set aside for a ‘rainy day’ and the fluctuating demands of city finances (for example the need to purchase a new vehicle). These reserves have declined over the past four years due to the economic impact of the pandemic. Additionally, the city had expected revenues from the planned downtown hotel that has been delayed.  We need this additional half penny sales tax provided by Measure U to retain the fiscal health of the city at least until revenues from the expected hotel taxes begin.”

Who’s on board?

Measure U is supported by a broad coalition of groups and individuals, including all five current councilmembers (though McLewis remains leery), and many former Sebastopol City Council members. It has the support of Sebastopol’s city staff, including City Manager Don Schwartz and Assistant City Manager/City Clerk Mary Gourley. It is also supported by 5th District Supervisor Lynda Hopkins, as well as the Sonoma County Democratic Party, the Sebastopol Police Officers Association and Sebastopol’s other municipal unions, as well as Sonoma County Conservation Action and Sebastopol Tomorrow. See the full list of endorsements.

A poll released in July of 300 randomly selected Sebastopol citizens found that 70.3% of respondents said they would vote yes on a 1/2 cent sales tax increase, while 23.3% said they would vote no.

Measure U requires a simple majority to pass.

Former councilmember Sarah Gurney is a supporter of Measure U. “I’ve worked to support every sales tax increase so far, and our electorate has consistently voted yes on these measures, expressing confidence in our governance,” Gurney said. “Our community reliably lifts itself up. I hope for the same ‘yes’ this year because Measure U addresses our residents’ quality of life at a time of critical need: continuance of basic services, street and sidewalk repair, maintenance and improvements to our parks, community policing. It’s at a low cost, 50 cents on a $100 taxable purchase. Importantly, Measure U spreads the responsibility for the costs for services and maintenance to those who come into town, not just on residents: visitors and regional shoppers who use Sebastopol as their commercial hub.”

While many members of the business community are concerned about increasing the sales tax, others are not. The Barlow donated $2,000 to the “Yes on U” campaign. Andrea Caron, the owner of Silk Moon, is also throwing her support behind Measure U.

“Wearing two hats, as both a business owner and a long-time resident, I see firsthand how crucial it is to support Measure U,” Caron said. “Our city’s in a tough spot with a $700,000 deficit, and we need practical solutions. From a business perspective, it’s vital that we maintain strong infrastructure—good roads, reliable services, and a safe environment are what keep customers coming and businesses thriving. And as a resident, I know how important it is for my family and neighbors to have these same services in place. The half-cent sales tax increase—just five cents on $10—won’t impact essentials like groceries or medicine, and it spreads the load across both locals and visitors. This small step helps ensure our city doesn’t fall behind, whether it’s keeping the streets safe or making sure emergency services are well-funded. Measure U is about more than just numbers; it’s about protecting our community, our homes, and our businesses for the long haul.”

Not everyone is convinced

Kate Haug, a Sebastopol resident who has been an active participant in council meetings for many years, writing public comments on a regular basis, wrote the ballot argument against Measure U.

Haug does not believe the half-cent sales tax will be effective. “Sales tax only works if you have sales increasing or remaining steady,” she wrote in response to an inquiry from the Sebastopol Times. “Sales have declined three years in a row. If sales keep declining, the sales tax will not solve the financial crisis.”

Rather, she believes the city should have a laser focus on economic development. “Increasing sales in existing businesses by 20% would bring in $907,000 annually without increasing prices,” she wrote. “This would be a win for the citizens, the city and local businesses. Council’s #1 job should be working with businesses to increase sales.”

“The only way out of the financial crisis is to work with businesses to increase sales, attract new business and fill our commercial vacancy,” Haug continued. “With or without the sales tax, these root issues need to be addressed for the city to remain solvent. If sales keep declining and vacancy increases, the sales tax will not solve the problem.” 

Haug also worries that a high sales tax rate will depress business further. “The proposed tax increase raises the prices of goods and services for everyone, and Sebastopol would have the highest sales tax in Sonoma County. As Sebastopol would have the highest tax rate, there is the chance that local sales would decline further as people look for cheaper options, which would harm revenues and also harm local businesses.”

She also suggested that many of the former councilmembers who are supporting Measure U are the ones who caused the city’s financial problems in the first place.

How did Maurer and McLewis eventually come to support Measure U?

Councilmember Maurer traces her path to supporting Measure U this way:

“Last year I opposed the sales tax initiative,” Maurer said. “I didn’t want to compete with the Sonoma County Fire Fighters ballot initiative, and having researched the city budgets, I wasn’t convinced of the need at that time,” she said. “I’ve been on the Budget Committee now for the past year, and it’s clearer to me that the city needs the additional financial support.”

“What changed my mind and why I supported the half-cent ballot initiative was the thought that if the extra quarter cent could be used for roads then I could support it.” she continued. “Councilmember McLewis suggested a council policy on how to prioritize the funds, and I suggested the 12-year sunset date. Both additions were accepted by the full council, and it was a unanimous decision. I felt reasonably assured with that vote that roads would be prioritized. The policy we adopted recently on how to spend the funds (if the measure is approved by voters) provides at least 40% to roads and infrastructure.”

“Another reason I changed my mind was that I had an anniversary dinner out with my husband at Goldfinch downtown. Our daughters had given us a gift card, and we had drinks and a really delicious meal. When the bill came, it was close to $150, the amount of the gift card. I looked at the current tax on $150 and thought about if it was 1/2 cent more and realized it would have added 75 cents. It didn’t seem like very much, especially considering the potential benefit to the town.”  

Councilmember McLewis remains at best a tepid supporter of Measure U.

“I can’t say that I’ve embraced the sales tax measure, but that I listened to the voters. I voted to put the sales tax measure on the ballot because I was presented data that Sebastopol residents expressed support for an increased sales tax,” she said. “As an elected official I’m expected to represent the constituents. Given the information I received, I felt that I needed to give the constituents the chance to vote on it.”

“That being said, I still felt concerned for how the monies would be used, which is why I’ve voted no in the past. After consulting with a city attorney, the sales tax policy [limiting how the money could be spent] was suggested as a means to communicate to the community the intent of the council.”

“I would also like to say that I am concerned about the impact this will have on our business community,” she said. “Some have already expressed concern to the council. It will now be up to the Sebastopol voters to decide.”

What would happen if Measure U fails?

Measure U is the centerpiece—along with budget cuts—of City Manager Don Schwartz’s plan to restore the city to financial stability. If Measure U is not approved, the city will not receive the approximately $1.5 million in sales tax revenues and will then have to both spend down its reserves and cut city services. Without Measure U funding, the city will deplete its reserves in about three years.

“Without Measure U, we wouldn’t have that $1.5 million a year to help with our current $700,000 deficit and try to address our depleted reserves,” Mayor Rich said. “That would mean tightening belts even more. That would mean serious discussions with our union representatives, and that would mean a reduction in services. There’s no tranche of money that the city can then use as a safety net to fall back on.”

“As mayor, I’ve been clear about the benefits that I believe a sales tax measure will bring to Sebastopol,” Rich said. “As an individual citizen, I will vote for the sales tax measure. As a member of our community, I fully understand that each of my neighbors will need to make their own decision, and that it’s not an easy decision. I just ask that each person consider the impact of this sales tax and the importance of their vote for our small town.”