City of Napa explores potential local funding measure to support public safety, critical services

Following a unanimous decision on January 16, Napa City Council directed City staff to explore a potential general sales tax measure over the next five months. With a focus on transparency and community involvement, the City is committed to keeping residents well-informed and addressing any questions regarding the possible measure and ongoing City funding challenges that could impact the quality of life for residents and local businesses.

With rising costs, anticipated slowing of revenue and other outside budget influences, recent financial modeling indicates that forecasted expenditures will exceed projected revenue levels within three years, potentially leading to a deficit that would impact current service levels. This potential measure would increase local funding to fill critical funding gaps in the areas of public safety, critical services, community amenities and city infrastructure.

"Council's decision to explore a potential sales tax measure reflects our proactive approach in addressing the financial realities facing our city. We recognize the importance of securing stable revenue sources to maintain essential services and infrastructure, especially in light of projected expenditure shortfalls," said City Manager Steve Potter. "Engaging our community in this process is crucial as we work together to ensure a sustainable and thriving future for Napa."

At the onset of the pandemic, Napa experienced a sharp decline in revenues, with shortfalls of over $15 million realized within just several months. Concerns that the State may further reduce revenues by $12 million starting in 2025, poses additional challenges to the City's financial stability. Having a stable financial revenue source is essential to Napa.

"Seeking funding for public safety, city services and critical infrastructure through a ballot measure presents a unique opportunity for us to not just address immediate funding gaps but also safeguard our city's long-term viability," said Napa Mayor Scott Sedgley. "By prioritizing local and sustainable funding for key services, we should be investing in the future success of Napa and our community."

A key aspect of this potential measure is that it provides a locally-controlled source of funding that cannot be taken by the State and would be used for City of Napa services. If passed by voters, the revenue from the sales tax could be used to preserve and improve key services like fixing streets and sidewalks, supporting mental health and homelessness programs and cleaning up encampments/abandoned vehicles, constructing essential city facilities, cleaning waterways and maintaining water quality, enhancing park conditions and recreational programs, and maintaining 911 response times and public safety.

Napa City Council explored multiple funding options before considering the sales tax measure, such as increasing the Transient Occupancy Tax (TOT) and considering a parcel tax or community facility district. However, upon careful review by staff, a sales tax measure was the only option that reached the revenue levels needed and is likely to be supported by the community/voters. Ultimately, exploring an increase in the sales tax rate emerged as the most viable option, whereas the current rate of 7.75% is among the lowest in the region. The proposed 1¢ increase would yield approximately $21M annually, which would be paid by both residents and visitors.

The process of exploring this potential measure will include discussions with stakeholders and residents to receive input and answer questions. The Council is considering placing the measure on the November 5, 2024, ballot, with the final decision expected to be made at a public meeting in June 2024.

The City remains committed to addressing these funding challenges and ensuring a prosperous future for our community. To learn more about Napa's budget challenges, find FAQs regarding the proposed 'Funding for Public Safety, City Services and Critical Infrastructure' measure and stay informed on future updates, visit: https://www.cityofnapa.org/1312

Residents are encouraged to watch the Jan. 16 Council Meeting video in full to better understand the purpose of the potential sales tax measure. Residents are also encouraged to mark their calendars for April 23, for an open house opportunity for residents to ask questions and engage with staff directly.

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