Agenda Item #15.1
For Council Meeting of: July 28, 2026
CITY OF SANTA ROSA
CITY COUNCIL
TO: MAYOR AND CITY COUNCIL
FROM: SCOTT WAGNER, CHIEF FINANCIAL OFFICER
MISTI D. WOOD, COMMUNICATIONS AND INTERGOVERNMENTAL RELATIONS OFFICER SUBJECT: TRANSACTIONS AND USE TAX BALLOT MEASURE
AGENDA ACTION: ORDINANCE INTRODUCTION
RECOMMENDATION
The City Manager's Office and Finance Department recommend the City Council (1) introduce an ordinance amending Chapter 3.30 of the Santa Rosa City Code to replace the City’s existing, voter-approved one-half cent transactions and use (sales) tax with a one cent tax, until ended by voters, and (2) adopt a resolution ordering the submission of the ballot measure to qualified electors of the City of Santa Rosa at the November 3, 2026, General Municipal Election and directing related actions. This item has no impact on current fiscal year budget.
EXECUTIVE SUMMARY
In 2020, Santa Rosa voters approved a one-half cent local transactions and use (sales) tax known as Measure Q. Revenue generated by Measure Q, which expires in 2031, funds core municipal services including public safety, infrastructure maintenance, and other City programs. Consistent with Council direction, this item includes the actions necessary to place before Santa Rosa voters a measure that would reauthorize the current one-half cent tax with a one cent tax. To ensure long-term funding stability for these services beyond 2031, the reauthorized one-cent tax would remain in effect until ended by voters.
If approved by the Council, the proposed ordinance will be submitted to the voters at the November 3, 2026 General Municipal Election. If approved by a majority of voters, the tax would become effective in accordance with applicable provisions of state law.
Following a July 14, 2026, Revenue Enhancement Study Session, Council directed staff to return with the actions necessary to place before Santa Rosa voters a measure that would reauthorize the existing Measure Q half-cent tax at a one-cent rate, at a term until ended by the voters. If the measure fails, the current one-half cent tax would remain in place until expiration.
GOAL
This item relates to Council Goal #1 - Achieve and Maintain Budgeting Excellence and Fiscal Stability.
BACKGROUND/PRIOR COUNCIL REVIEW
Santa Rosa voters have previously supported the approach of local funding for local needs. In 2020, voters approved a one-half cent local transactions and use tax through Measure Q. Revenue generated by Measure Q supports the City’s General Fund and helps maintain core municipal services, including public safety, infrastructure maintenance, and other core City programs and services.
The City recently reduced budgets for fire, police, and other services. Without acting, more cuts are coming.
During its July 14, 2026 Study Session, the City Council received a Revenue Enhancement Report evaluating the City’s long-term fiscal outlook, projected service demands, potential revenue options available to the City, and public feedback on service priorities and a potential transactions and use tax measure. The report identified modifying the City’s local transactions and use tax as one option for addressing ongoing structural budgetary challenges and maintaining service levels to meet community expectations.
Following the Study Session, the Council directed staff to return with the actions necessary to place before Santa Rosa voters a measure that would amend the City’s transactions and use tax ordinance by reauthorizing the current one-half cent tax at the one cent rate, at a term of until ended by voters, to address the City’s budget deficit and maintain the City services community members have said are important.
The proposed reauthorization measure includes strict accountability provisions and fiscal safeguards, requiring independent audits and public disclosure of all spending. Every penny must be used for Santa Rosa.
If approved by the City Council, the proposed ordinance will be submitted to the City’s voters at the November 3, 2026 General Municipal Election. If approved by a majority of voters, the reauthorized, voter-approved transactions and use tax would become effective in accordance with applicable provisions of the law.
Senate Bill 762
Current law authorizes cities to levy a transactions and use tax for general or specific purposes, subject to the requirements of the Transactions and Use Tax Law. This includes a requirement that the combined rate of all taxes imposed may not exceed 2%. The City is one of 13 cities and counties included in California Senate Bill 762, which is making its way through the legislative process and has passed the State Assembly. If adopted by the state legislature, it would take effect immediately as an urgency statute. It would allow the City, by ordinance, to impose a transactions and use tax at a rate of no more than 0.5% above the 2% limit established by existing law.
ANALYSIS
This item includes a recommendation to introduce the proposed ordinance and adopt the resolution required to place the measure before the voters at the November 3, 2026 General Municipal Election.
Public Feedback
As part of a monthslong community engagement effort, the City conducted a final resident survey in June 2026. When asked about service priorities, respondents placed the greatest value on maintaining emergency medical and fire response services, maintaining police services, including response to violent crime, and maintaining streets and public spaces. The majority (80% to 89%) of respondents rated these services as either “extremely important” or “very important.” Additionally, 80% of respondents rate maintaining the City’s financial stability as “extremely important” or “very important.” Generally, these results have an approximate 6.9% margin of error.
As to funding, over half (53%) of respondents believe there is “some need” or “a great need” for additional revenue. Over half (55%) of respondents indicated they “definitely” or “probably” would support a measure as described in this report; this number increases to 62% when including respondents who lean towards yes. The survey has a margin of error of about 4.9% for the full sample and about 6.9% for the half sample, at a 95% confidence level.
Earlier this year, the City conducted a bilingual survey to obtain additional broad, inclusive community input. Over 2,400 people responded and provided similar feedback about service priorities. Maintaining fire services, police services, and streets and public spaces all ranked highly, with addressing homelessness arising as a priority, as well.
Ballot Measure
The following summarizes key features of the proposed ballot measure:
Updates the existing voter-approved general-purpose transactions and use tax from one-half cent to one cent until ended by voters, to be administered by the California Department of Tax and Fee Administration (CDTFA).
As a general-purpose revenue measure, passage will require majority (50% plus one) voter approval.
Includes strong fiscal accountability provisions. Along with the City’s ongoing commitment to citizen involvement as a fundamental principle of good government, fiscal accountability provisions include:
Charter-required independent annual financial audit. The amount of revenues generated by this measure along with other General Fund revenues will be included in an annual financial audit performed by an independent certified public accountant.
Integration of the use of funds into the City’s budget and goal-setting process. The estimated revenue and proposed use of funds generated by this measure will be an integral part of resolving the City’s budget shortfalls, and better position leadership to fulfill voter-defined City Council Goal Number 1 – achieving and maintaining budgeting excellence and fiscal stability.
Ordinance
California Elections Code requires City Council to adopt a resolution calling and ordering the election before the measure may be submitted to the voters. The proposed Resolution establishes the election date, ballot question, and related election procedures necessary for placement of the measure on the November 3, 2026 General Municipal Election ballot.
If approved, the proposed ordinance will take effect after the election results are verified. A simple majority of those voting on the measure in the November 2026 election is needed to approve the general sales tax. The tax will be collected for the City under an agreement with the CDTFA.
The ordinance would reauthorize the existing voter-approved Measure Q transactions and use tax with a one percent (one cent) rate, contingent upon approval by a majority of Santa Rosa voters at the November 3, 2026 General Municipal Election. If approved, the existing one-half cent tax would be superseded by the new one cent tax in accordance with the effective date established under state law and the ordinance.
Resolution
A resolution is necessary to place the tax measure on the ballot for the November 2026 Election. The resolution must be approved by five affirmative votes of the Council to be adopted. The resolution calls for a municipal election for the tax measure and requests its consolidation with other elections being held on the same date. The resolution contains the wording of the tax measure as it will appear on the ballot.
The Resolution also requests the City Attorney to prepare an impartial analysis of the measure and allows for the submittal of rebuttals to the arguments that may be submitted for inclusion in the ballot pamphlet.
FISCAL IMPACT
If approved by voters, revenues generated by the transactions and use tax would be deposited into the City’s General Fund and would be available for lawful municipal purposes, consistent with the provisions of the ordinance and applicable law.
Approval of the recommended actions will place the proposed ordinance before Santa Rosa voters for their consideration at the November 3, 2026 General Municipal Election. Approval of these actions does not itself change the tax; any change would only occur upon voter approval.
If approved by voters, the measure is expected to generate $23.5 million in additional revenue. This would help address the General Fund's projected $14 million structural deficit, a figure that currently excludes unfunded critical infrastructure needs like the maintenance of neighborhood streets.
ENVIRONMENTAL IMPACT
This action is exempt from the California Environmental Quality Act (CEQA) because it’s not a project which has a potential for resulting in either a direct physical change in the environment, or reasonably foreseeable indirect physical change in the environment, pursuant to CEQA Guideline Section 15378.
BOARD/COMMISSION/COMMITTEE REVIEW AND RECOMMENDATIONS
None.
NOTIFICATION
Not applicable.
ATTACHMENTS
Resolution
Ordinance
PRESENTER(S)
Scott Wagner, Chief Financial Officer
Misti D. Wood, Communications and Intergovernmental Relations Officer
TRANSACTIONS AND USE TAX BALLOT MEASURE
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