Lafayette staff warns of structural budget gap, proposes half‑cent 'Measure H' sales tax

City of Lafayette Administrative Services Director Tracy Robinson presented the city’s fiscal outlook to the Planning Commission on Sept. 16, saying the city faces a structural budget deficit that would exhaust reserves in roughly five years unless revenue increases or spending reductions occur. Robinson introduced Measure H, a proposed half‑cent general sales tax on the November ballot, as the council’s plan to close the current gap.

Robinson said the city’s deficit for current service levels is “about 10% of the budget, which is a little bit over $2,000,000,” and that, under current trends, the city “will run entirely through its reserve in about 5 years.” She described the proposed Measure H as “a one‑half cent sales tax … in effect for 7 years” that would require a simple majority to pass and create a citizen oversight committee.

The presentation focused on Lafayette’s revenue structure and drivers of the gap. Robinson explained that Lafayette receives a relatively small share of county property tax (she cited “6.7%” of the 1% countywide property tax) and that the city’s principal general‑fund revenue sources are property tax, sales tax, franchise fees, fees for service and state funds. She said sales tax in Lafayette is currently 8.75% and that the proposed half‑cent would generate roughly the $2.4 million needed to fill the city’s current budget gap.

Staff identified several contributors to the deficit: increased pavement management costs (about $1 million a year, which Robinson said accounts for roughly half the shortfall); a 144% rise in insurance costs over five years; escalating costs tied to state mandates such as stormwater pollution compliance (a current shortfall of about $300,000 per year); and inflation. Robinson also noted ongoing costs associated with implementing affordable housing programs, saying the work will “require about 1 full time employee for the next few years” and that the city has begun setting aside $215,000 annually to assist affordable housing projects.

Robinson said the city has used roughly half of its American Rescue Plan Act (ARPA) funds to bridge the current fiscal year, frozen some positions and asked department heads to identify cuts if Measure H does not pass. She said the council’s reserve policy holds an amount equal to 60% of general‑fund expenditures (roughly $12 million on a $20 million budget) for emergencies and that tapping reserves is a one‑time solution that would not solve the structural shortfall.

Commissioners asked about outreach and next steps. Commissioner Heising thanked staff for outreach materials and asked how the city will inform residents; Robinson and a city staffer said the city has distributed two mailings of VISTAs to every household, will issue another in October, has a measure H page on lovelafayette.org, and will continue presentations to community groups and commissions. Staff also said there is a separate volunteer Measure H advocacy committee unaffiliated with the city; city officials said they may only provide information in their official roles and cannot advocate while acting in their official capacity.

Commissioner Sturm asked about reserves and the timing and process for cuts. Staff said council previously asked departments to prepare roughly 10% reductions as a contingency and that, if Measure H fails, council will engage the public about proposed cuts after the election. Robinson said the half‑cent tax is sized to “bridge that gap completely” for the term of the measure and that the city will reassess near the end of the seven‑year period.

The presentation included staff comparisons showing Lafayette’s share of county property tax and regional sales tax rates; Robinson noted that even with a half‑cent increase Lafayette’s sales tax rate would remain lower than Moraga and Orinda and similar to Pleasant Hill, Walnut Creek and Concord. Staff repeatedly framed the shortfall as structural (ongoing baseline costs outpacing revenues) rather than the result of a single large past expenditure.

Next steps: Measure H will appear on the November ballot; staff will continue public information efforts, and council and commissioners may participate in informational (but not advocacy) activities in their official roles. The presentation closed with staff offering to meet individually with residents and with a reminder that the measure’s advocates are a separate committee.