Revenue Enhancement Options
FINANCE SUBCOMMITTEE
SEPTEMBER 14, 2023
ALAN ALTON
CHIEF FINANCIAL OFFICER
Overview
▪ General Fund has a budgetary structural deficit
▪ ARPA programs returning to General Fund, Council may want to add others ▪ New labor contracts will add to current deficit
▪ Struggling to be competitive in current labor market
▪ Deficit corrected through increased revenue, expenditure reductions, or combination of the two
▪ Flat budget for all non-personnel related costs for FY 2024-25 ▪ Also, no ongoing “additional needs” or FTE requests
▪ Identifying Revenue Enhancements
▪ Strategy for taking item to ballot – look at 5-year and longer timeline, not all at once 2 Potential Revenue Enhancements
▪ Transient Occupancy Tax (TOT)
▪ Increase amount to General Fund
▪ Utility Users Tax
▪ Modernize UUT – Telephone to include wireless devices ▪ Business Tax
▪ Make more equitable by adjusting or removing cap on some business types ▪ Include residential property rentals for 1-3 units (Tax currently applies to 4+ units) ▪ Sales Tax
▪ Renew ½ cent add-on (Measure Q) prior to June 2031 sunset ▪ Potentially increase
▪ Measure Q revenue approx. $23 million per year
3 Transient Occupancy Tax (TOT)
City of Santa Rosa
▪9% TOT
▪ 100% to General Fund
▪ SRTBIA 3%
▪ 30% to Econ Development
▪ 70% to SR Tourism
▪ SCTBIA 2%
▪ 100% to Sonoma Co. Tourism
▪ Total TOT and BIA rate of 14%
▪ FY 2022-23 TOT Revenue: $5,994,113
City TOT BIA -
Local
BIA -
County
Total
Cloverdale 10% 2% 12%
Healdsburg 14% 2% 16%
Petaluma 10% 2% 12%
Rohnert Park 12% 2% 14%
Santa Rosa 9% 3% 2% 14%
Sebastopol 12% 2% 14%
Sonoma 13% 2% 15%
Windsor 12% 2% 14%
Sonoma County 12% 2% 14%
4 Utility Users Tax (UUT) - Telephone
City of Santa Rosa
▪ 5% UUT
▪ 100% to General Fund
▪ Capped at $1,000
▪ Does not apply to wireless
communications
FY 23 UUT – Telephone
Revenue: $955,528
City Rate Wireless Cap Notes
Cloverdale 3%* Yes No Plus 2.5% on pre-
paid wireless
Healdsburg No
Petaluma No 2%
Rohnert Park No 2%
Santa Rosa 5% No Yes $1,000 cap
Sebastopol 3.75% Yes No
Sonoma No
Windsor No
5 Business Tax
City Gross Receipts Flat Rate Cap Notes
Cloverdale No Yes Rate dependent on business type
Healdsburg Yes Yes Based on gross receipts w/ max tax amt ($400, retail; $665, contractors)
Petaluma Yes Yes .016% - .048% of gross receipts; cap at $45 Rohnert Park No Yes Yes Per employee; $50 first, $15 each add.; $5,000 max
Santa Rosa Yes No Yes $3,000 cap on four business groups Sebastopol No Yes Per employee (retail/wholesale/services) $90-$340; professionals, $150 first, $75 each
other
Sonoma No Yes Rate per employee.
Windsor No Yes $71 initial application; $26 renewal
6 Santa Rosa Business Tax
Group 1: Retailing, Wholesaling, Manufacturing, Corporate Headquarters ($25 plus $0.34/$1000 for each $1,000 over $25,000)
Group 2: Services, Health Care Centers, Rental of Residential Property, Rental of Non-Residential Property, Public Utilites ($25 plus $0.84/$1,000 for each $1,000 over $25,000)
Group 3: Contractors, Land Developers, Recreation and Entertainment ($25 plus $1.09/$1,000 for each $1,000 over $25,000)
Group 4: Professions
($25 plus $1.68/$1,000 for each $1,000 over $25,000)
Gross Receipts 8,500,000$ Gross Receipts 3,500,000$ Gross Receipts 2,750,000$ Gross Receipts 1,750,000$ First $25,000 25$ First $25,000 25$ First $25,000 25$ First $25,000 25$ Remaining 2,882$ Remaining 2,919$ Remaining 2,970$ Remaining 2,898$ Total Tax 2,907$ Total Tax 2,944$ Total Tax 2,995$ Total Tax 2,923$ Group 4Group 3Group 2Group 1
Examples
7 Sales Tax
▪ Current Sales Tax in Santa Rosa is 9.25%
▪ 7.25% California Sales Tax
▪ 2.00% Local District Taxes
▪ Of the 9.25% of Sales Taxes, City directly
receives revenue from 1.75%
▪ General Fund Sales Taxes: ~$74M est.
▪ 1.0% Bradley Burns ($49.3M est.)
▪ 0.50% Co. Public Safety – Prop 172 ($1.5M)
▪ 0.50% District Tax – GF ($23.8M est.)
▪ Public Safety Special Tax
▪ 0.25% District Tax – Non-GF ($12M est.)
State Wide Sales & Use Tax Rate
California General Fund 3.9375%
County Public Safety (Prop 172) 0.5000%
County Realignment (Mental Health, Public Safety) 1.5625% City/ County Operations (Bradley Burns) 1.0000%
Countywide Transportation Fund 0.2500%
Total CA State Tax 7.25%
District Taxes Rate
City of Santa Rosa 2020 TUT (Measure Q) 0.5000%
City of Santa Rosa Public Safety TUT (Measure H) 0.2500% County of Sonoma Agricultural Preservation 0.2500%
County of Sonoma Library Enhancement Act 0.1250%
County of Sonoma Mental Health & Homeless Services TUT 0.2500% County of Sonoma Parks and Safety TUT 0.1250%
County of Sonoma Transportation Authority 0.2500%
Sonoma-Marin Area Rail Transportation Authority 0.2500% Total Local District Tax 2.00%
Total Sales Tax in the City of Santa Rosa 9.25%
8