To: Members of the Measure G Citizen Oversight Committee
From: Steve Potter, City Manager
Prepared By: Liz Habkirk, Assistant City Manager
TITLE:
Title
Measure G Budgeted Revenues and Expenditures for FY 2024/25, FY2025/26 and FY2026/27
LABEL
RECOMMENDED ACTION:
Recommendation
Receive a report from staff on initial Measure G Budgeted Revenues and Expenditures for FY 2024/25, FY 2025/26 and FY 2026/27.
Body
DISCUSSION:
On November 5, 2024, the electorate of the City of Napa passed Measure G approving a new one cent (1 cent) local transactions and use tax (TUT) until such time as it is ended by voters. The approval of Measure G increases the total of the state and local sales tax on purchases in the City from 7.75% to 8.75%. Measure G is expected to generate approximately $22 million annually. Below is a table showing budgeted Sales Tax Revenue with anticipated Measure G funds:
Although Measure G is a general tax whereby the revenues may be spent for any governmental purpose as directed by the City Council, the City has taken great care to establish clear guidance on the budgeting and expending of the funds. There are several areas of direction described below which have been provided for staff. Collectively these represent the philosophy the City has used to plan for the initial years of expenditures. They include the ballot language provided to the voters, the “Principles for Allocating Measure G Funds” established by the City Council, and the budget cycle “Focus Areas” determined by Council as priorities for staff over the next two years.
Ballot Language
The Ballot Language provided voters with an overview of areas in which the new funding was likely to be spent. These were developed after significant community conversations and feedback opportunities, scientific polling of the electorate on highest City priority service areas, and discussions on needs with senior management throughout the organization. These areas included:
• Repairing potholes/ streets
• Maintaining parks, recreation, senior/ youth programs
• Protecting water quality
• Supporting police with mental health response team for nonviolent calls
• Upgrading fire stations with lifesaving equipment
• Homeless encampment cleanups
• Constructing essential facilities
• Enhancing fire protection
Principles for Allocating Measure G Funds
Additionally, at their January 30, 2025 Council Workshop, the City Council provided further direction to staff on the “Principles for Allocating Measure G Funds”. These principles were incorporated into budget preparation and planning. The four principles for allocating funds were to:
1. Ensure financial stability of the City services as foundational.
2. Focus on engagement with the public to ensure transparency of where the funding is spent and maintain the public’s trust.
3. Address community priorities, such as infrastructure, parks and recreation, and public safety, which represent critical needs.
4. Leverage funding to ensure maximum impact for the residents of Napa.
Council Focus Areas
At the same workshop, the Council also laid out the Focus Areas for the upcoming budget cycle which will include Fiscal Year 2025/26 and Fiscal Year 2026/27. In addition to the guiding principles, the Focus Areas provided staff with clear direction on how to allocate discretionary funding, including Measure G, over the next two fiscal years. There were five Focus Areas identified by Council:
- Climate Action: Continued commitment to sustainability initiatives both internally and throughout our community.
- Roads & Traffic Safety: Expanding efforts to focus on street maintenance and repairs, while also prioritizing traffic safety features for all modes of transportation to create comprehensive projects.
- Economic Resilience: Working to diversify our local economy, promote partnership and collaboration with the business community, and strengthen the local workforce.
- Parks & Community Spaces: Enhancing Park maintenance, expansion, and the development of additional community spaces and recreational amenities.
- Community Engagement: Increasing opportunities for community involvement through improved engagement efforts, expanded communications on City issues and projects, increased public feedback, and education on issues of community concern.
Collectively, the Ballot Language, Principles for Allocating Measure G Funds and the Council Focus Areas were used as guidance by Department staff to develop budget recommendations and requests which were presented to the City Manager for consideration. The City Manager, in consultation with the City’s Budget Officer and Finance Director, determined which requests were ultimately recommended to the City Council at their Budget Workshop in April of this year. The City Council provided feedback and direction to staff which were used to finalize the budget for presentation and then adoption at two public hearings in June.
As presented to the City Council, the Measure G allocation over FY 24/25 (beginning with collection of the new tax in Quarter 4), FY 25/26 and FY 26/27 includes spending in the following categories:
Details on these expenditure categories are included in Attachment 1 (Expenditure Spreadsheet) and Attachment 2 (Budget Package Information Sheets).
With the spending plan adopted by Council, the City has focused initial years of Measure G spending on significant infrastructure improvements - primarily in the streets and sidewalks and park amenities. These are considered one-time expenditures and will allow the City to ensure it prioritizes financial stability into future years when unknown economic conditions may impact either the anticipated revenue from Measure G or the overall budget outlook. Prior to Measure G, the City was facing a structural budget deficit, meaning operating expenditures were outpacing operating revenues. The City has taken the opportunity with Measure G to help correct this situation and also enhance core service areas. As we consider our financial future, the majority of Measure G funding is allocated to one-time projects that do not require on-going future funding commitments.
The budget is considered a spending plan and staff generally returns several times during the course of a fiscal year to Council with updates and recommendations based on any changing conditions experienced. Staff will continue to update the Measure G Citizen Oversight Committee with any amendments to the spending plan at future meetings.
FINANCIAL IMPACTS:
None.
CEQA:
The City Manager has determined that the recommended action described in this agenda report is not subject to CEQA, pursuant to CEQA Guidelines Section 15060(c).
DOCUMENTS ATTACHED:
ATCH 1 - Measure G Expenditure Spreadsheet
ATCH 2 - Measure G Operational Budget Package Information (FY2025/26, FY2026/27)
ATCH 3 - Measure G Capital Budget Package Information (FY2025/26, FY2026/27)
ATCH 4 - Presentation
NOTIFICATION:
None.