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Novato Measure M is way too high

Measure M is a Novato sales tax hike of 0.75% on the November ballot. It would increase Novato's sales tax from 8.5% to 9.25%.

Currently, Novato's sales tax rate is just a bit below the average of 8.73% for Marin County cities. Measure M would boost Novato's sales tax rate to be the highest in the County (tied with four other cities).

Source: CDTFA

Novato's Budget Deficit is way smaller than Measure M sales tax increase

The projected annual budget deficits out to fiscal 2029 - 2030 average $3.6 million.

Source: City of Novato as quoted in the Marin IJ on September 2nd

Measure M should be reduced from 0.75% down to 0.25%.

A reduction in Measure M sales tax increment from 0.75% down to 0.25% would reduce the Measure M's take from $10.3 million down to $3.4 million per year. And, that should close Novato's structural budget deficit.

Projecting adjusted budget deficit or surplus with a 0.25% sales tax

The model below projects the annual and cumulative budget deficit or surplus over the next 6 fiscal years. It uses as a base case that Novato taxable sales increase by only 2% per year. This is a very conservative assumption as it includes both real economic growth (increase in unit sales) and inflation (increase in price). As shown, even using this very conservative scenario a 0.25% sales tax increase would allow Novato's cumulative budget to break even over the next 6 fiscal years.

Next let's explore different scenarios with annual taxable sales increases ranging from 2% to 6%. As shown below, the cumulative budget surplus by year 6 would range from break even to $2.3 million.

Conclusion

As demonstrated above the 0.25% sales tax increase is sufficient to close out Novato's structural budget deficit. It also would bring Novato's overall sales tax to equal the average for the cities in Marin County. If the average Marin County city can manage its financial affairs with an overall sales tax rate of 8.75%, so should Novato. There is no need for Novato to raise its sales tax rate by 0.75% to reach the top of the most taxed cities in Marin County. Doing so may adversely affect its business climate, reduce sales, and raise less revenues than anticipated.

Appendix. Follow-up on Tina G McMillan's commentaries

Tina G McMillan raises some interesting considerations that Measure M would cover a lot more than Novato's structural budget deficit of about $3.5 million per year. She provided links to documentation on the subject. I have attached the main document [Measure M presentation]. Within this document you can see Novato's projected budget deficits. These are very similar than the numbers quoted in the IJ that I reviewed already.

The deficits shown above would be entirely covered by a 0.25% sales tax increment instead of a 0.75% one.

This presentation also shares infrastructure needs that would be covered by Measure M.

As described the infrastructure needs are not precisely specified. Over how many years would the $51 million in infrastructure projects be undertaken?

These needs may be entirely legitimate. But, with such limited information the voters are ill informed regarding what they are voting for and paying for. Meanwhile, the proposed 0.75% sales tax increment is forever.

There are other evidences that the city of Novato is not fully transparent regarding its fiscal management. Bernard Meyers has done extensive coverage on the subject.

Comparison of Novato's Measure M vs. Mill Valley Measure L

Novato's misleading information

For the same reasons, the Marin Coalition of Taxpayers is also against Measure M.

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