Santa Rosa voters likely will be asked in November to support indefinitely extending and doubling the city’s half-cent sales tax to shore up city finances and fund deferred maintenance needs.

The City Council on Tuesday tentatively endorsed moving forward with the proposal and directed staffers to return with a measure to be referred to the general election ballot.

A one-cent measure is expected to generate $47 million annually to help close a projected long-term deficit of $23.3 million, or higher if the half-cent tax isn’t at least renewed; and stave off severe cuts, including cutting police positions and closing a fire station.

Council members, while acknowledging residents too are facing economic pressures and may be wary of supporting a tax increase, said the additional funding is critical to maintaining city services.“We’ve made efforts to put the budget on firmer footing but we’re at the point where we still have a structural deficit,” Mayor Mark Stapp said Wednesday. “We can fill that deficit with the ballot measure we’re proposing or we can fill that deficit with additional cuts.”

“This is a chance for the residents to decide whether they want to invest in the city. And if the residents instead want the City Council to cut its way out of this situation, the cuts are going to be painful,” he added.

The city over the last three fiscal years has taken steps to curb spending, eliminating 82 positions, consolidating departments and restructuring pension debt, while also raising revenues by increasing hotel and business taxes and other fees.

Those efforts have slowed the pace at which the deficit is growing but have been insufficient to close the long-term gap, which represents about 10% of the adopted $232.9 million general fund budget, as rising costs continue to outpace revenues.

“All of the knobs that have been available to us to turn we have turned up until this point,” Chief Financial Officer Scott Wagner told the council. “We are at the end of the runway.”

Wagner said the city must now turn to voters for help.

Polling paid for by the city and conducted in January as well as a more recent survey held in June showed the proposal polled above the simple majority needed to pass.

The proposal, if approved, would raise Santa Rosa’s overall sales tax rate, including the base state rate of 7.25%, and countywide taxes that fund roads, parks and child care, to 10.5%, among the highest locally and across the state, pushing it over the state tax cap and requiring legislative approval.

The measure, as presented by staff, would not have a sunset date, meaning it would remain in effect until voters overturn it via another ballot measure. Voters in recent years have approved several taxes without a sunset date, including taxes funding the regional library system and countywide fire services.

It wasn’t clear whether the new rate would go into effect immediately or after the existing half-cent tax expires in 2031. A city spokesperson said staffers were still drafting proposed ballot language.

The City Council is expected to formally consider referring the measure to the ballot during their regular meeting July 28, ahead of the Aug. 7 deadline to place measures on the ballot.

City executives last year began weighing a sales tax measure for the 2026 ballot and brought on consulting firm Lew Edwards Group to help conduct polling and community outreach and provide recommendations to the city.

The discussions came as the council considered layoffs, a reduction in police ranks, cuts to homeless services and other operational reductions aimed at shrinking a long-term deficit that was then expected to reach $47 million as costs for employee salaries and benefits climbed and revenues dipped.

Santa Rosa’s existing general sales tax, known as Measure Q, was approved in 2020 and combined two quarter-cent sales taxes approved in 2010 and 2018. It generates about $23.5 million annually to support city services.

In addition to Measure Q, the city also has a quarter-cent public safety sales tax that supplements police, fire and violence prevention programs. Voters in 2022 approved a 20-year renewal of the tax.

Sales taxes make up the largest revenue source in the city’s general fund, at about 33%, but is an increasingly vulnerable revenue source.

Revenues have declined the last three years as consumer spending shifts away from goods toward services and as people purchase more goods online rather than at brick-and-mortar stores that contribute to the local economy, which has contributed to the city’s fiscal woes.

While revenues are beginning to stabilize, budget officials only projected a minor increase of $1.5 million in the new fiscal year that started July 1, not enough to offset rising costs.

Wagner said additional funding from the sales tax, if approved, would go toward stabilizing the budget as well as help the city invest in maintenance needs currently not funded by the general fund, such as pavement maintenance.

Without additional funding, Wagner warned the city will be looking at a fourth straight year of cuts.

Scenarios outlined by city staff show the city would need to eliminate roughly 42 positions and programs to balance the budget, including specialty teams in the police department, such as narcotics, traffic enforcement and the downtown team, and of one of the city’s 10 fire engine companies. Similar proposals floated last year were widely unpopular among the community, and impacted departments and council members who ultimately pushed for staff to find other areas in the budget to trim.

Recreation services such as an adult softball league, youth sports and the Tiny Tots program also would be eliminated and there would be reductions across the planning and public works departments.

A few residents addressing the council during public comments Tuesday expressed skepticism about the plan.

Duane DeWitt, a Roseland resident and frequent face at the City Hall rostrum, said the city should look at other ways to raise revenue first, including charging fees to unlicensed food vendors and selling city properties, particularly prime real estate downtown.

Council members during their discussion also expressed reluctance to go to voters for more funding but members said it was necessary.

“This is not an easy thing, I know, for some of our residents and especially for folks who are low-income. I just want to say as someone who has had two to three jobs since 2016, I know how hard it is,” Council member Caroline Bañuelos said.

Bañuelos, who represents the city’s central District 5, however, noted that she has seen the impacts cuts to police and other city services has had on the city’s ability to respond to calls for service and address homelessness downtown.

She supported staff returning with a proposed ballot measure for the council’s consideration.

Stapp, speaking after the meeting, said the city is likely to encounter voter fatigue but feedback from stakeholders, including labor, business interests and neighborhood groups, gathered over the past half-year has been generally positive.

“Not enthusiasm, to be clear, but people understand the city has a difficult set of cards to play and that this plan is likely the best one going forward,” he said.

He noted polling also has been positive. About 55% of respondents to the June survey indicated they “definitely” or “probably” would support the measure as presented by staff, while 7% leaned toward supporting it, according to findings shared Tuesday.

Stapp said if the council advances the measure to the ballot, city officials will have to continue robust community outreach to educate voters about the need for the additional funding.

“This is very much a community decision — we are deciding as a community which direction we want the city to go,” he said. “If we decide to go forward with the tax, the city has laid out a number of positive benefits. If the community decides we don’t want to tax ourselves, we can continue to make cuts at the city but we want to make sure the community has received fair warning of the cuts that are going to be coming because the impacts are going to be felt quickly by residents.”

You can reach Staff Writer Paulina Pineda at 707-521-5268 or paulina.pineda@pressdemocrat.com. On X (Twitter) @paulinapineda22.