The Petaluma City Council struggled with a difficult financial dilemma Monday: Should it hire a much-needed police officer or an equally needed police dispatcher with its scarce funds?
The decision - pushed off until city staff can better analyze funding sources - reflects the fact that Petaluma needs more revenue.
As roads deteriorate, emergency vehicles break down, the police department considers removing one officer from patrol, maintenance is deferred and pension and healthcare costs rise, city staff has urged the City Council to explore a tax measure for the November 2014 ballot. Now, facing a $2.3 million budget deficit by 2016, the council agreed Monday to begin polling voters about a possible tax increase.
"We have a ton of unmet needs," said City Manager John Brown, who added that the city doesn't want to be in the position it's in now with police staffing, stuck deciding between one need and another need. "These are all pipers that must be paid. We really don't have the funding to cover our costs and a tax of some kind appears to be the answer to this problem."
Mayor David Glass went even further: "We don't have to go bankrupt as a city, but we will if we don't make some changes."
Putting a tax measure on the ballot is not cheap. Brown estimates that public polling alone can run anywhere from $20,000 to $40,000. The total cost of running a tax increase campaign, including polling, education, outreach and advocacy could be as much as $200,000, he said. And there's no guarantee that the measure will pass.
Because of these high stakes, Councilmember Chris Albertson and Mayor David Glass recently conducted some hands-on research, traveling to the city of Fairfield, which, in 2012, passed a 5-year, 1 percent general sales tax increase. It's expected to generate an impressive $13 million annually.
"In Fairfield, they surveyed their community on the three things people most wanted tax increase dollars spent on," said Albertson. "Then, they crafted a tax to cover those three things - police, fire and streets - and it passed with 68 percent of the votes."
But Glass, who was impressed by Fairfield's ability to pass such a large tax increase in a predominately tax-averse area, said that Fairfield went to great lengths to prove to its voters their sacrifice was needed.
In Fairfield, every city employee outside public safety took a 10 percent pay cut prior to the tax increase, said Glass. "Granted, their pay was higher than ours is, and most of our city employees can't go any lower. But you can't go to the voters and ask for a tax when you haven't proved that you have cut everything you can. And in our city, our biggest expenditure is public safety."
Glass, who gave the public safety unions credit for recently negotiating a second tier of retirement benefits with the city and paying into their pension programs at rates well-above the average of other cities in the county, said that he is not advocating for pay cuts from current public safety employees. But he pointed out that the fire department's on-duty minimum staffing levels have remained untouched during a time when the police department has lost 13 officers.
"I'm not anti-fire," He said. "But we have the fire department completely whole, while every other one is bleeding. If we don't have some voluntary cooperation from the public safety unions, how can we ask the voters for the same things?"
Echoing Glass' sentiments was Sonoma County Taxpayer Association President Dan Drummond.
"There is no doubt that we have a funding problem," said Drummond at the Monday night meeting. "But we'll continue to oppose any tax measure talk or polling until we see some concessions from the public safety unions."
Councilmember Mike Healy, who has long discussed the need for additional tax revenue, pointed out that nearby cities like Santa Rosa and Sonoma have successfully passed general sales tax increases in recent years, all while facing similar budget concerns.
"Every voter is well-aware of pension costs," said Healy. "But most of our neighboring cities have been successful with sales tax measures, despite their pensions obligation. Voters were willing to dig into their pockets."
Healy added that the city has already approved the East Washington and Deer Creek shopping centers, ensuring additional revenue and proving to voters that Petaluma has done everything it can.
Specialized taxes, like the one in Fairfield, require two-thirds-plus-one voter approval to pass. This makes such increases very difficult to achieve, even if a measure is generally favored.
Meanwhile, general taxes only require 50 percent-plus-one approval. While the lower threshold often makes passing general taxes easier, it requires voters to have faith in city government, since the funds can be spent at the council's will.
"Doing a general tax appeals more to me, because of the lower threshold," said Albertson. "But Fairfield was able to pass a specialized tax by tailoring it to the voters' concerns. There are pros and cons to both options and polling will help us make those decisions."
Much remains undecided about Petaluma's possible tax measure, including if it would be a specialized tax levied for a specific purpose like street maintenance, or a general tax that would go into the city's general fund coffers; if it will be a permanent or temporary increase; and how much of an increase it would be. Officials hope that polling help the council decide these details and whether to seek a sales, parcel or hotel tax increase.
A half-cent sales tax increase would generate an estimated $5 million annually for the city. A 2 percent increase in the hotel tax would generate an estimated $270,000 each year. Revenue from a parcel tax would vary, depending on the amount.
The city's sales tax is currently 8.25 percent - tied with Sebastopol for the second lowest in the county. Cloverdale, Healdsburg and Windsor have the lowest rate at 8 percent, while Cotati, Rohnert Park, Santa Rosa and Sonoma are all at 8.5 percent.
Polling will begin once the city contracts with a professional firm. Brown said he hopes to have hired a firm by the end of September and have results before the end of the calendar year.
(Contact Janelle Wetzstein at janelle.wetzstein@arguscourier.com)
(Correction: An earlier version of this story incorrectly stated Petaluma's sales tax rate as 8 percent, when it is actually 8.25 percent.)
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