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Tina Mc
Straight from the Horse's Mouth - City of Novato on Measure M
Frequently Asked Questions About Measure M
Where will the money be spent if Novato's voters pass a sales tax measure?
Aside from backfilling the current systemic deficit, the City will focus first on replenishing reserves to ensure compliance with the Council’s reserve policy. After that, the community has asked staff to focus on deferred maintenance needs like pothole and street maintenance, maintaining 9-1-1 emergency response, reducing wildfire risk and maintaining parks and recreation programs and facilities.
What type of oversight does Measure M include?
All expenditures are approved by the City Council, subject to the budget review process and community input and included in independent audits and mandatory public spending disclosures as well as oversight by the City’s Finance Advisory Commission. The need for the measure will be reevaluated at year 10 and every 5 years thereafter.
What cost-savings measures has the City of Novato taken?
In 2003, Novato had 234 employees providing service to the community; that number dropped under 190 during the pandemic after the City made significant cuts to staff and is now at 198 for Fiscal Year 2024/25. With employees comprising 70% of the City’s operating budget, additional revenue is needed to avoid further reductions in staff and impacts to crucial services provided to our community.
Additionally:
- The City’s user fee schedule was evaluated and updated after 15 years, resulting in an additional $1.2M in revenue annually
- Organizational assessments are routinely conducted on a department-by-department basis to ensure we’re running efficiently in departments;
- The City reduced investments in capital improvements including roads, parks and facilities, making short-term decisions with long-term impacts;
- As employees retire or resign, programs and positions are evaluated for potential outsource to contractors;
- The City has continued to rely on one-time dollars like property sales and American Rescue Plan funding to cover ongoing costs;
- The City has also received grants that have assisted in covering costs of service for programs like homeless response;
- Additionally, City staff is always seeking ways to perform our work in a more cost-effective manner.
Is the City of Novato caught up with financial audits?
The City is caught up on financial audits through Fiscal Year 2021/22 and all have included unmodified (“clean”) opinions from the independent auditors. Fiscal Year 2022/23’s audit will be complete by December of 2024, meaning the City is now only a couple months behind.
Why doesn't the City of Novato utilize its emergency or “rainy day” funds to backfill the deficit?
The Council has directed staff to utilize the City’s emergency funds to backfill the basic costs for services. Effective this fiscal year, we are out of compliance with Council’s reserve policy and by Fiscal Year 2026/27, the City will run out of emergency funds if no additional funds are identified. The emergency reserve is projected to be at 8.5%, rather than the 15% reserve policy set by Council, at the end of FY24/25.
I’ve heard sales taxes are regressive, meaning they affect low-income residents the most; what is exempted from an increase in sales tax?
The City has increased revenue in several ways, leaving us with few additional options to increase revenue in a way that will address the systemic deficits and deferred infrastructure maintenance needs. While some may view sales tax as regressive, other taxes, such as a utility user tax, are much more regressive in nature. Additionally, sales taxes do not apply to basic needs such as groceries, medicine, medical and dental bills, real estate, rent, education, utilities, personal services and labor.
How much of Measure M would go to Novato?
100% of the local sales tax revenue generated in Novato must stay in Novato for local use. These monies could be used to:
- fix potholes
- maintain 9-1-1 emergency response and public safety
- reduce the risk of wildfires
- maintain parks and recreation programs and facilities
If Novato does not increase the sales tax to the State cap of 9.25%, other regional community service agencies could issue a measure and take the sales tax to the cap outside of Novato including local agencies like the Sonoma Marin Area Rail Transit (SMART), the Transportation Authority of Marin (TAM), or the County (or County agencies).
How is Novato doing?
In a recent survey, almost 80% of Novato residents rated the quality of life as excellent or good. Nearly two-thirds of residents indicated they are satisfied with the job the City is doing providing services. While these are strong marks, the City of Novato is proactively working to ensure that the City's ongoing budget deficit does not impact vital services, community safety and quality of life.
What has caused funding challenges in Novato?
Several root causes of Novato's funding challenges exist. Nearly 40% of the City's funding comes from local property taxes and Novato receives the smallest share of local property tax revenue of all Marin County cities. While cities like Mill Valley, Larkspur, San Anselmo and Belvedere receive over 20% of the property tax revenue generated locally, out of every dollar Novato residents pay in property tax, only 7¢ returns to the City. Similarly, Novato's sales tax rate is the second lowest in Marin County, and of the 8.5% sales tax collected in Novato, only 1.25% comes back to the City.
What does the City of Novato's budget fund?
Nearly 70% of the City Budget funds the city workers who deliver services to residents, with the largest portions being police officers and emergency services personnel focused on maintaining public safety; public works employees who fix potholes, repair streets and sidewalks, maintain parks and repair city facilities; and parks, recreation and community services workers who run programs for children, youth, families and seniors.
Has the City of Novato reduced employee headcount?
Since 2003, the City has eliminated over 30 positions. Despite these reductions, essential services such as police patrols, emergency response, street repair, and park maintenance have only incrementally declined with help from one-time property sales and COVID recovery funding – which has now been expended and depleted. Further reductions would directly impact crucial services provided to our community. The community has prioritized maintaining quality of life in Novato. A continued long-term, locally controlled, dependable financial solution, such as a local sales tax measure, would preserve City services for our community as well as address aging infrastructure – like our parks, street and facilities.
What options is the City of Novato considering for protecting services?
To protect services that the community values, the City of Novato is evaluating options for ensuring that more of the funding generated in Novato, stays in Novato. For example, in a recent independent study of Novato’s budget, the Marin County Civil Grand Jury recommended that Novato increase the portion of the sales tax rate that is locally controlled, so that those funds stay in Novato and cannot be taken away by the County or regional agencies.
How does Novato's current property tax compare to other Marin County cities?
The City of Novato receives the smallest share of property tax paid out of all Marin County cities. Of each dollar Novato residents pay in property tax, only 7¢ returns to the city. Mill Valley, San Anselmo, and other local cities receive 20% of property tax revenue generated in their cities.
Why does only 7% of property taxes paid by Novato residents return to the City? What can we do to change this?
In 1977, Novato chose to remain a low property tax City and locked down the amount of property tax collected, just a year before Proposition 13 further restricted property tax collection. That decision, combined with our late incorporation in 1960 as well as Prop 13, has significantly constrained our ability to make adjustments to our property tax allocation.
To increase the City’s share of property tax dollars, a full repeal of Proposition 13 state-wide would be necessary. Additionally, Novato has a number of special districts that share in local property tax allocations, including the Novato Unified School District, Novato Fire District, College of Marin and others.
How much does the City of Novato currently receive in sales tax and how does it compare to neighboring agencies?
The Novato sales tax rate is 8.5% of which only 1.25% comes to Novato, the remainder goes to the State of California, the County of Marin, the Sonoma Marin Area Rail Transit and the Transportation Authority of Marin. San Rafael, San Anselmo, Larkspur and Sausalito’s sales tax rates are all set at 9.25%; Corte Madera and Fairfax’s sales tax rate is 9.0%. Petaluma’s sales tax rate is 9.5%.
Don’t we already pay a tax to Novato called Measure C? Is this an extension of Measure C?
Measure M is separate from Measure C, a ¼¢ tax passed at 74% by Novato voters in 2015. The now-expired Measure F, Measure C’s predecessor, was set by Council and approved by 58% of the community at ½¢. The change from Measure F to Measure C resulted in a loss of approximately $3M annually.
What work does the City of Novato do to prevent wildfires?
The City is responsible for clearing brush, trees and weeds on City properties, as well as maintaining City buildings and landscaping. With the end of the drought, there’s an increased need for keeping up with weeds and other fire fuel to reduce fire risk.
Has the City of Novato considered an organizational study to find efficiencies?
The City Council included a staffing study in the August 2023 strategic plan with the intention of assessing the City’s current organizational structure and staffing. Suppressed service levels, staff turnover and an inability to fill critical positions in the City have led to a desire for an assessment to ensure we can meet the community’s needs. A draft of the referenced study has been submitted to staff for review, the expectation is that it will be finalized in the next month.
Has the City of Novato evaluated the fees it charges?
The City completed a comprehensive evaluation of its user fees in 2022, after 15 years, resulting in an additional $1.2M in cost recovery revenue annually.
Has the City of Novato reduced or eliminated non-essential programs?
A comprehensive organizational study, including evaluation of City services that can be contracted out, is underway. Additionally, as employees retire or resign, programs and positions are evaluated for potential outsourcing to contractors. Dependent upon the program, utilizing a contractor is not always the most cost-effective option. Also, during the pandemic, Council approved elimination of some programs, including Child Care. Furthermore, we are always looking at ways to do our work in a more cost-effective manner.
Is the City of Novato investing enough in its infrastructure?
Due to a lack of funding, the City has not been investing enough in its infrastructure. For example, at the July 9, 2024 Council meeting, Council received a presentation on the City’s pavement condition index (PCI). The City’s current street condition is “fair” with a PCI of 66. In 2013, the City’s PCI was 72. With only $3M allocated annually for streets, the PCI will fall to 61 by 2027. To improve the PCI back to 72, an additional investment of $8M annually would be needed to ensure that number by 2027.
How many voters are required to pass a measure?
General measures require a 50% plus one majority of voters.
Do voters support the measure?
The City engaged Godbe Research and McGuire research to conduct polling in May 2024 of likely voters in Novato with around 60% approving the measure. The Council voted unanimously on July 23, 2024 to place a sales tax measure on the November 2024 ballot for community consideration.
Where can I learn more?
As the City evaluates options for protecting essential services and enhancing locally controlled revenue, please share your thoughts by emailing AssistantCityManager@novato.org or call 415.899.8903.
Frequently Asked Questions About Measure M | City of Novato, CA