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Vote No on M
Novato Has Been Fiscally Irresponsible - Vote NO on Measure M
Novato officials have mismanaged town finances since 2017. They have wastefully spent or loaned millions and foregone additional millions in revenues. Now, City officials are seeking a sales tax increase from the current rate of 8.5% to 9.25%.
How can taxpayers ensure that Novato gets the funds it needs while ensuring that the funds are not wasted?
- Vote No on Novato’s sales tax increase: Measure M.
- Insist that the City Council offer voters a new sales tax measure with appropriate guardrails to ensure Novato’s revenues are wisely spent.
- Insist that City officials pursue grants to augment revenues and increase operational efficiency and effectiveness by collaborating (cost and services sharing) with other agencies, where feasible.
Financial Mismanagement
The Marin Civil Grand Jury’s June 2023 report, “Novato’s Chronic Fiscal Deficits – A Call To Action,” argues that
“There have been lapses in Novato’s financial management to the detriment of Novato and its citizens.”
“While Novato’s City Council has known for more than a decade about its financial challenges and looming deficits, they have not taken sufficient measures to resolve them.
“The Grand Jury offers recommendations for promptly addressing the need to put Novato’s financial house in order.”
“The Grand Jury recommends that the City implement accepted financial controls; that it establish comprehensive records management systems; that it create a new position of an independent internal auditor; that it review all properties that it owns to identify opportunities to generate revenue, and that it aggressively investigate all possibilities to increase long term revenue, including increasing the sales tax.”
Since 2017, City officials have not completed any required annual audited financial report on time (it was three years behind at one point). They are still behind. As a result, Novato has missed opportunities for over $7 million in federal and state grants because some grantors require current audited financials, which City officials were unable to supply.
Meanwhile, the City’s record keeping has been so poor that they did not know that a portion of the Corporate Yard was on 5 acres of property of the neighboring telecom company. When the telecom company decided to sell all 5 acres, City officials, on an emergency basis, paid $5.8 million, borrowing from Novato’s vehicle fleet fund to help with the payment.
The City Council created a Citizens’ Oversight Committee, but the Council has repeatedly ignored its recommendations. As such, it is misleading for the City Council to say that Measure M provides for an Independent Oversight Committee, because the City Council has the final say on how funds are spent, regardless of the Oversight Committee’s opinions.
For example, the City Council, by a 3/2 vote, overruled the objections of its Oversight Committee and City staff, to spend $5.5 million building the SMART Grant Avenue station. The Council borrowed from the Hamilton Trust for funding.
Then in October 2022, when the Oversight Committee unanimously recommended Novato refuse to provide to a third party a $2+ million loan for 30 years at 2.5%, the Council, by a 3/2 vote, overrode their recommendation and used the Hamilton Trust for funding. Had the Council invested those funds with the U S Treasury, it would have received over a 4% return; if the investment were in AA+ corporate bonds, the return would have been 5.4%.
According to the City’s “Frequently Asked Questions About Measure M” found on the City’s website (page 1 #3 and page 3 #12), the City has also neglected to update its user fees for 15 years. When it finally did in 2022, revenues increased by $1.2 million annually. Therefore, over the prior 15 years, Novato may have lost $9 million.
So much for being a responsible fiscal trustee.
Lack of Transparency
Early this year, the City began a campaign using slick, multi-colored flyers mailed to households to mislead voters into voting for a sales tax increase. The flyers highlighted the fact that the City receives only 7% of the property taxes paid by residents and implied that Novato taxpayers received the lowest property tax share of all 11 Marin cities. What the City failed to say was that, unlike other Marin cities, the City does not pay the costs to provide fire protection for its residents.
The Novato Fire District provides those services and for those services, NFD’s receives an additional 14.5% share of the property taxes paid by Novato taxpayers. When NFD’s share is added to the City’s share (7% + 14.5% = 21.5%), Novato taxpayers receive some of the highest percentage shares of all Marin cities! Other Marin cities also pay for libraries and some sewer services out of their property taxes, while Novato does not.
We expect City officials to be straight with us. Instead, the City is misconstruing the facts and using our tax dollars to get us to vote for higher taxes.
The Council has not offered any reasonable explanation for not including normal guardrails, such as a sunset clause in Measure M. The City only has a 5-year plan, so it cannot forecast its needs six years from now, much less 20, 40, or 50 years out.
The Council has refused to provide any tangible benchmarks in Measure M, so voters can measure how Novato is managing the funds, as Mill Valley has in its comparable sales tax measure on its November ballot. The Mill Valley sales tax also has a sunset clause but Measure M does not. Instead, the Council lists all kinds of things it could do, without disclosing that it need not do any of those things and that it could do other things, as they see fit.
For example, City officials could use funds derived from the Measure M sales tax increase to pay down the City’s multi-million dollar unfunded pension liabilities before filling even one pothole or hiring one additional police officer.But, even though City officials were silent about pensions in their marketing materials and in the FAQs on their website, pensions are a legal obligation of the City. Nondisclosure of that fact is another example of a lack of transparency.
Measure M’s reviews by future City Councils, starting in the 10th year of the tax, are merely window dressing. The review simply means that whatever Council is then in existence could decide to forego the tax or not. But, how realistic is that? When was the last time we have seen a city forego tax revenues they have come to rely on for 10 years?
As another example of the City’s lack of transparency, on September 12, 2024, the City ruled out holding a public debate with the opponents of Measure M.
If Measure M passes without a sunset provision (no ending date for the tax) and City officials continue to mismanage Novato’s finances over the next 8 years, the way they have over the past 8 years, taxpayers will have no reasonable means of curing this, other than spending considerable time and money to bring forth a public ballot initiative to curtail them.
The City Manager’s threats of staff layoffs and curtailed public services are just scare tactics
The City Manager asserts that a failure to pass Measure M will result in drastic cuts to employees and services. This is false. The Manager and Council know that Novato’s current budget is fully funded through June 2025.
If the City chose to, it could cushion future budget shortfalls through June 2027 by using funds it has in its reserve account or several of the pots of money it has (remember those loans from the Hamilton Trust and the fleet fund?). In the interim, it could create a better sales tax measure that included better oversight and a sunset clause.
Finally, if Measure M fails at the ballot box, it would not be catastrophic as the City claims. The Council could quickly place a new sales tax measure before the voters, with appropriate accountability and guardrails, by declaring a financial emergency and placing a new measure on any of the available 2025 Special Election dates (March 4, May 6, Aug. 26, or Nov. 4).
There is no reason to believe that if the City receives more tax revenues that it will run the City in a more fiscally responsible manner, going forward. Submitting Measure M to voters without financial accountability, meaningful oversight, and a sunset clause only perpetuates the City’s irresponsible behavior.
Taxpayers should vote against Measure M and then, if city officials want to increase our sales tax, they should offer a new measure with appropriate guardrails to inhibit officials from continuing their fiscal mismanagement.
Scare tactics should not be the basis of an argument for a tax measure.
For more information, see NoNovatoSalesTax.org