All expenditures are approved by the City Council, subject to the budget review process and community input and included in independent audits and mandatory public spending disclosures as well as oversight by the City’s Finance Advisory Commission. The need for the measure will be reevaluated at year 10 and every 5 years thereafter. 

In 2003, Novato had 234 employees providing service to the community; that number dropped under 190 during the pandemic after the City made significant cuts to staff and is now at 198 for Fiscal Year 2024/25. With employees comprising 70% of the City’s operating budget, additional revenue is needed to avoid further reductions in staff and impacts to crucial services provided to our community. 

Additionally: 

• The City’s user fee schedule was evaluated and updated after 15 years, resulting in an additional $1.2M in revenue annually
• Organizational assessments are routinely conducted on a department-by-department basis to ensure we’re running efficiently in departments;
• The City reduced investments in capital improvements including roads, parks and facilities, making short-term decisions with long-term impacts; 
• As employees retire or resign, programs and positions are evaluated for potential outsource to contractors; 
• The City has continued to rely on one-time dollars like property sales and American Rescue Plan funding to cover ongoing costs; 
• The City has also received grants that have assisted in covering costs of service for programs like homeless response;
• Additionally, City staff is always seeking ways to perform our work in a more cost-effective manner. 

100% of the local sales tax revenue generated in Novato must stay in Novato for local use. These monies could be used to:

• fix potholes
• maintain 9-1-1 emergency response and public safety 
• reduce the risk of wildfires 
• maintain parks and recreation programs and facilities

If Novato does not increase the sales tax to the State cap of 9.25%, other regional community service agencies could issue a measure and take the sales tax to the cap outside of Novato including local agencies like the Sonoma Marin Area Rail Transit (SMART), the Transportation Authority of Marin (TAM), or the County (or County agencies).

In a recent survey, almost 80% of Novato residents rated the quality of life as excellent or good. Nearly two-thirds of residents indicated they are satisfied with the job the City is doing providing services. While these are strong marks, the City of Novato is proactively working to ensure that the City's ongoing budget deficit does not impact vital services, community safety and quality of life.

Several root causes of Novato's funding challenges exist. Nearly 40% of the City's funding comes from local property taxes and Novato receives the smallest share of local property tax revenue of all Marin County cities. While cities like Mill Valley, Larkspur, San Anselmo and Belvedere receive over 20% of the property tax revenue generated locally, out of every dollar Novato residents pay in property tax, only 7¢ returns to the City. Similarly, Novato's sales tax rate is the second lowest in Marin County, and of the 8.5% sales tax collected in Novato, only 1.25% comes back to the City.

Nearly 70% of the City Budget funds the city workers who deliver services to residents, with the largest portions being police officers and emergency services personnel focused on maintaining public safety; public works employees who fix potholes, repair streets and sidewalks, maintain parks and repair city facilities; and parks, recreation and community services workers who run programs for children, youth, families and seniors.

To protect services that the community values, the City of Novato is evaluating options for ensuring that more of the funding generated in Novato, stays in Novato. For example, in a recent independent study of Novato’s budget, the Marin County Civil Grand Jury recommended that Novato increase the portion of the sales tax rate that is locally controlled, so that those funds stay in Novato and cannot be taken away by the County or regional agencies. 

The City of Novato receives the smallest share of property tax paid out of all Marin County cities. Of each dollar Novato residents pay in property tax, only 7¢ returns to the city. Mill Valley, San Anselmo, and other local cities receive 20% of property tax revenue generated in their cities.

In 1977, Novato chose to remain a low property tax City and locked down the amount of property tax collected, just a year before Proposition 13 further restricted property tax collection. That decision, combined with our late incorporation in 1960 as well as Prop 13, has significantly constrained our ability to make adjustments to our property tax allocation.

To increase the City’s share of property tax dollars, a full repeal of Proposition 13 state-wide would be necessary. Additionally, Novato has a number of special districts that share in local property tax allocations, including the Novato Unified School District, Novato Fire District, College of Marin and others. 

The Novato sales tax rate is 8.5% of which only 1.25% comes to Novato, the remainder goes to the State of California, the County of Marin, the Sonoma Marin Area Rail Transit and the Transportation Authority of Marin. San Rafael, San Anselmo, Larkspur and Sausalito’s sales tax rates are all set at 9.25%; Corte Madera and Fairfax’s sales tax rate is 9.0%. Petaluma’s sales tax rate is 9.5%. 

As the City evaluates options for protecting essential services and enhancing locally controlled revenue, please share your thoughts by emailing AssistantCityManager@novato.org or call 415.899.8903.