Poll shows Petaluma public safety tax has support

Petaluma officials are hoping that voter’s positive sentiment toward police and firefighters after October’s wildfires will carry over to the ballot box this November.

Faced with spiking pension costs, deferred maintenance and lagging staffing levels, the city council is considering asking voters to approve a sales tax increase to support public safety and help pay pension costs. Also on the table is an increase in taxes charged for stays in hotel beds and permitted short-term vacation rentals. Council members and city staff plan to educate voters about both options before making decisions about crafting a ballot measure this summer ahead of the fall election.

“What we found coming out of fires, and it’s no secret to anyone, is that our firefighters and our police, our public safety people - as everyone in the counties did - did an outstanding job of trying to save structures and keep that fire contained despite what it was,” City Manager John Brown said at a Monday council meeting. “There was a huge outpouring of goodwill and still continues to be for public safety … It looked like it might be an opportunity to put a public safety tax on the ballot.”

A ½-cent increase in sales tax could generate between $6 million and $6.5 million a year, Brown said. Pensions tied to public safety employees currently cost about $800,000 a year, and he said the rest of the funds could go toward mending the ailing departments.

Staffing at the fire department has remained the same as pre-recession levels, with 58 full-time personnel, according to Director of Human Resources Amy Reeve. Police staffing has dropped from 102.5 full time employees in the 2007-08 fiscal year to 91.7 this year, she said.

“We’re running at a minimum staffing level in both our police and fire departments and that is creating real problems when it comes to scheduling,” Brown said. “People are working a lot of overtime. It’s almost mandatory in some cases that they work that overtime and that’s not a sustainable situation going forward. We haven’t had the money to put into equipment, vehicle replacement or construction and so all those systems are in sore need of repair or replacement and we need staffing.”

Additional hotels are expected to come online in the city soon, and a 2 percent increase to the city’s current 10 percent transient occupancy tax, or TOT, could net $870,000 a year, according to a staff report.

But, a February poll of more than 1,000 voters conducted by Oakland-based FM3 research showed that putting the two tax measures on the same ballot would likely doom them both.

The survey of likely voters, administered online and by telephone, also showed that voters are largely out of touch with the city’s fiscal woes.

Voters view traffic and potholes as their biggest concerns, while three in five respondents saw a need for additional funding for city services. Only 36 percent of those surveyed felt it was “very accurate” or “somewhat accurate” that the city is on the brink of a budget shortfall.

The city is in fact speeding toward a fiscal cliff, with a $37.1 million deficit projected by 2026, according to staff projections.

“You do have a bit of a tough community in terms of that they really need to be educated on these things,” FM3 Senior Researcher Lucia Del Puppo said. “Sometimes, it doesn’t matter and there’s a part of the community that has a negative connotation with taxation.”

The city has considered a medley of options, including increases in transfer taxes for real estate transactions, before settling on the current strategy. The hospitality industry has not expressed support for the hotel tax increase, and has instead proposed creating a special taxing district to collect fees to bolster Petaluma’s tourism. Brown said that option is not a favorable one for the city.

A slim majority of voters - 51 percent - supported a 3/4-cent sales tax increase that would phase out in 20 years. A 1/2-cent sales tax for 20 years garnered 56 percent support, making it the most viable option. Support for sales taxes increased to 57 percent after positive arguments, indicating that outreach could sway voters.

Fifty-two percent of voters approved of the proposed hotel tax increase, though support increased to 66 percent after positive messaging in the polling.

Under the current law, general sales tax measures require a simple majority - 51 percent - to pass. But a petition currently being circulated by the California Business Roundtable to place a measure on the November ballot to raise the threshold for passage of tax measures to a two-thirds super majority is a cause for concern, city officials said.

Should voters approve the Tax Fairness, Transparency and Accountability Act of 2018, it would eliminate the city’s ability to pass general tax measures and would void any tax passed this year unless it was approved by 2/3 of voters.

Despite uncertainty created by the petition, Councilman Dave King said additional revenue is key for the city. Even after attempts to quell pension costs, which are mostly tied to former city employees, costs are anticipated to increase by $1 million each year for the next 10 years after changes to California Public Employees’ Retirement System at the state level. The city is projected to spend $12.96 million on benefits in the current fiscal year – up nearly 4 percent from the previous budget.

“This has been identified as a pension tax, but the reality is whether a sales tax measure passes or a TOT tax passes or doesn’t pass, the obligations of the city to pay pension liability still exists,” he said. “The reality is we’re paying that pension liability regardless. It’s a message that’s unpleasant for many people.”

Increasing the transient occupancy tax wouldn’t generate enough to patch the city’s budget, but City Councilwoman Teresa Barrett advocated for a pass at the measure if the tax fairness act makes it onto the ballot.

“If that’s the reality in late July that the Roundtable item will be on the November ballot, I would still like us to consider evaluating how much it would cost to put TOT on the November ballot,” she said. “Because I think that’s one we might be able to get - we did get up to 66 percent in the polling with positive messaging and I would rather see us make an attempt at that and show that we’re willing to ask out-of-towners to take the first bite at this.”

Councilman Mike Healy said he’s generally in support of a sales tax measure and is seeking more clarity about the impact of the petition.

“The sales tax would raise enough to be meaningful, TOT not so much,” he said. “I’m most intrigued by a half-cent general sales tax over the next 20 years.”

Dan Drummond, the executive director of the Sonoma County Taxpayers Association, said he would like to see public safety employees make larger contributions to their pension costs. While he said he’s acutely aware of the city’s budget woes and pension obligations, the group will likely oppose the measures.

“I think we would probably be inclined to oppose it because of the lack of contributions on the part of the public safety union,” he said. “That’s a very tentative decision, we haven’t seen what it’s going to look like.”