Benicia places sales tax measure on March 2024 ballot while warning of financial ruin

BENICIA – The Benicia City Council unanimously approved placing a three-quarter-cent sales tax increase on the March 2024 California primary ballot on Tuesday, warning that the city could face dire financial consequences if it is not approved. 

The council declared a fiscal emergency earlier this month, a necessary step to include the proposed tax increase on the upcoming ballot. State law requires that such measures coincide with local City Council elections unless the City Council adopts a resolution proclaiming a fiscal emergency.

City Manager Mario Giuliani said that if the measure does not pass, the city would need to lay off a third of its staff across all departments, including police and firefighters. Even if it does, the city will need to cut seven to 10 jobs by July 2025, Giuliani said.

“We are not talking about enhancement,” Giuliani said. “We are not talking about making improvements. We are talking about survival.”

"Without it you will see dramatic change in the level of service we can provide our community,” Giuliani said. “Even with this we are still going to have to constrain spending and reduce services for the next handful of years. Not until 2027 are we going to be able to build back things."

But looming over the council is the fact that voters just rejected a sales tax increase last year, so the passage of the measure in March is far from certain. Giuliani said that the city would be pivoting from the messaging of the 2022 measure, which emphasized road repair, and instead argue that the funds are necessary to maintain basic city services.

The sales tax increase is anticipated to generate approximately $5.4 million annually, which would go to the city’s general fund. It will require a simple majority of voters to pass, as did the 2022 measure, Measure R, which was defeated by 294 votes.

Draft ballot language said that the funds would go toward ensuring the protection of 911 and fire emergency response times, preserving local parks, sustaining recreation and library services, and supporting other vital city programs. 

The measure includes some elements to promote transparency and trust. It calls on citizens to form an independent oversight committee and includes a sunset provision, so city officials would have to ask voters to pass another measure in 2036 or else downsize the city.

Mayor Steve Young said that there may be frustration with sales tax increases after spending from Measure C, which passed in 2014, shifted over time from capital projects to operational expenses. "People voted for Measure C with the understanding that there would be projects, such as road repair or fire trucks,” Young said. “Now all of that's gone, and it's all going to operations.”

"We are no longer doing the capital projects with this money because we don't have the luxury," Young said.

Guiliani said that the messaging for Measure C was similar to what he was proposing for the 2024 measure, but Measure C did not have a sunset provision.

The sunset provision and citizen’s committee were added after former Councilmember Lionel Largaespada suggested them in public comment during the Nov. 7 meeting, when the council declared the fiscal emergency. Largaespada opposed the sales tax increase last year, but narrowly lost his seat in the same election.

Largaespada also said that the ballot measure should include road repair, as he believed that after public safety, roads were the most important topic to Benicia voters. While the council opted not to include roads in the ballot measure, Giuliani emphasized that as a general tax the money could be spent on anything, including roads.

“What I didn't want was to highlight roads and for people to believe it's just for roads,” Giuliani said. "But it doesn't mean it can't be used for roads.”

The council also approved on Tuesday a separate ballot measure that would raise the city’s transient occupancy tax, commonly known as a hotel tax, from 9% to 13%. City staff estimated that the tax hike would add $250,000 to the city’s general fund annually. It also would expire in 12 years.

Young said that he had recently spoken to the general manager of Best Western, who had concerns that raising the price could deter guests. But Giuliani said that Benicia’s hotel taxes were currently lower than surrounding cities and the hike would make it similar to taxes in Vacaville and Napa. It would exceed Fairfield’s, which is 10%, and Vallejo’s, which is 11%.

Early voting for the election will begin on Feb. 5 and the election will be held on March 5.