Sonoma County urged to raise taxes on tourists

The Sonoma County Board of Supervisors is eying a tax increase this year to launch high-profile initiatives and fund core government services that it has struggled to pay for, including road repairs, universal preschool and new affordable housing development.

County staff are recommending that supervisors place a 3 percent hotel bed tax increase on the November ballot as part of the board’s annual budget hearings, which are set to get underway Monday.

So-called transient occupancy taxes are levied on overnight guests staying at hotels, motels, campgrounds and other lodging establishments. At present, the tax rate is set at 9 percent. An increase to 12 percent could generate an additional $4.6 million for the county’s general fund, according to county officials.

The county’s 2016-2017 budget includes a 2.8 percent increase for the recommended $443.4 million general fund, the county’s main source of discretionary dollars that supports core services such as public safety and roads, as well as other initiatives backed by the board.

Supervisors are poised to adopt the county’s total $1.63 billion spending plan by next week.

Next year’s budget includes $7.2 million in new spending on salary and benefits increases for most county employees as a result of new labor agreements reached earlier this year with eight of the county’s 11 bargaining units, as well as one group of unrepresented county employees. Salaries and benefits costs for government workers is at $596 million a year, or 37 percent of the county’s total spending.

If approved, next year’s budget will increase staffing next year by roughly 1 percent, for a total of 4,147 full-time employees. The county is boosting staff to administer new programs, including one set up to increase civilian oversight of law enforcement, as well as one that puts new limits on vacation rentals and another that meets local mandates in the state’s Sustainable Groundwater Management Act.

Next year’s total spending plan represents a 1.4 percent increase from this year. County officials said increases in property and sales tax revenue have buoyed efforts to repair county roads, address the county’s housing crisis, reduce homelessness and fund early childhood education.

“I think the county is enjoying strong fiscal health,” said County Administrator Veronica Ferguson. “It has given us an ability to meet basic core services while financing other board priorities.”

Tax revenue is up across the board this year, with a total increase of $15.1 million. A 3 percent increase on hotel bed taxes, paid largely by tourists, would help the county meet its goals, officials said.

Supervisors are expected to weigh in on the tax proposal during budget hearings this week.