The Abridged version:
- To solve an ongoing structural budget deficit, Yolo County will have to cut costs and raise revenue.
- On Tuesday, leaders explored short and long-term options, including an increased transient occupancy tax, a fix to the county’s disproportionate share for the state Educational Revenue Augmentation Fund and a review of restricted fund balances.
- The supervisors also directed staff to start thinking about what it would take to bring a potential sales tax increase to voters.
As the Yolo County Board of Supervisors on Tuesday discussed options for raising revenue, including potential tax increases, the stakes were clear.
Dozens of county employees, many of whom are at risk of losing their jobs due to countywide budget cuts, sat in the audience holding signs that read “cutting workers cuts our community.”
Some rose to speak about what the elimination of positions in child welfare, social services, employment services and social work could mean for the county.
“The work these roles perform is not optional,” said county social worker Breanna Kraft during the public comment period. The county is considering cutting roughly 120 jobs.
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Deep cuts and layoffs are likely unavoidable this year and next as the county contends with a $35 million deficit. But moving forward, the board will need to find ways to raise revenue, too.
On Tuesday, it considered the possibility of raising the transient occupancy tax, finding a legislative fix for the county’s disproportionate share of the state Educational Revenue Augmentation Fund and review of restricted fund balances to support the struggling General Fund. Longer term, staff hopes the board will consider an increase in sales tax, expansion of its juvenile hall population and increased billing to Medi-Cal.
“All of the options that are put on the table ought to be taken seriously,” Supervisor Mary Vixie-Sandy said. “Whatever we can do as quickly as we can do it on the revenue front, let’s get on it.”
“I don’t think we can cut ourselves out of this level of a hole,” said Supervisor Sheila Allen. “We really need to be working on both sides of the equation.”
This budget crisis has been years in the making, but more recent expenses are compounding the deficit. During the meeting on Tuesday, staff informed supervisors that the county is setting aside $1 million for legal defense related to Esparto fireworks explosion that happened last summer.
According to county counsel, the county must provide legal defense for defendants who can’t afford their own. So far, two defendants have fallen under that category.
Short term options
Part of Tuesday’s discussion centered on the options that could yield revenue in the shorter term.
This includes an increase of the county’s transient occupancy tax, which is levied on local hotels, motels and inns for stays that are fewer than 30 days. In Yolo County, the current rate is 8%, while some surrounding jurisdictions have a 12% rate. If raised to 12%, the potential revenue would be about $250,000 per year.
“It’s not a huge amount, but at this point every bit is essential,” Supervisor Lucas Frerichs said. “We’ve been a little behind the eight ball when it comes to what other jurisdictions are doing.”
If the supervisors decide to move ahead with the increase, it could come to voters as soon as November.
If then approved by a simple majority in the unincorporated county, the increase would only apply to businesses outside of incorporated Davis, Woodland, Winters and West Sacramento.
In addition to that, the board discussed solving the county’s ongoing challenges with ERAF, which has been shorting the county about $3 million per year for almost 30 years. Remedying that would require a legislative fix, and staff said that Sen. Christopher Cabaldon has submitted a budget request for consideration in the coming fiscal year.
That fix would come down to a negotiation between the Legislature and the governor’s office when the state budget is being drafted. Historically, those discussions have not borne fruit for Yolo County.
Longer term options
Longer term, the board directed staff to start analyzing what needs to happen for a vote on a potential increase in sales tax in 2028.
“I just don’t think the work has been done to tee things up for this November,” Frerichs said. “It feels like still a couple of years off.”
The potential choices before staff and supervisors include whether the increase should be only in the unincorporated areas or countywide. If the incorporated areas are included in a 1% increase, the generated revenue could be between $40 million to $50 million. If they aren’t, it would bring in about $6 million.
But Davis and West Sacramento have already increased their own sales tax and Woodland is likely to ask voters to increase theirs this November. That would make persuading voters to approve another countywide sales tax difficult.
“We have a lot of work to do over the course of the next couple of years,” Frerichs said.
Supervisors also asked staff to start thinking about coming up with an economic development plan for Yolo County and solar infrastructure development on nonprime farmland.
Daniel Hennessy joins Abridged from the California Local News Fellowship. He’s a reporter covering Yolo County.