Measure N framed as 10-year one-time stabilization; staff plans glide path to reduce reliance

City staff told the council that Measure N, the 1% transactions-and-use tax voters approved Nov. 5, 2024, will provide a limited, 10-year source of one-time funds that the city plans to use to stabilize operations while it pursues ongoing revenue and expenditure solutions.

“Measure N effectively provides a 1 time source of funds with which to balance our budget over the next 10 years,” Jennifer Wakeman, finance staff member, told the council during the workshop. Wakeman said the tax became effective April 1, 2025 and raised the local sales tax rate to 9.75%.

Revenue forecast changes and reporting cadence Wakeman said the finance department’s sales-tax consultant revised the Measure N revenue estimate: in August 2023 the consultant projected $15,700,000; in February 2025 the estimate was revised to $14,800,000, a decline of $900,000 (about 5.7%). Staff explained the downward revision resulted from final FY24 sales-tax audit numbers and subsequent conservative modeling. Wakeman also explained that sales-tax data from the California Department of Tax and Fee Administration (CDTFA) are published with a lag—typically a quarter behind—so the city receives updated figures about once every quarter.

Policy framing and timeline Wakeman said the city intends to treat Measure N proceeds as one-time funding each year while pursuing permanent solutions to balance ongoing revenues and expenditures. She said the objective is to reduce the annual amount of Measure N applied to the operating budget over time and to use the measure to create breathing room for a multi-year plan to reach fiscal sustainability. The presentation highlighted a seven-year checkpoint: by year seven the council will need to evaluate whether progress toward ongoing balance is sufficient or whether a renewal or other policy choice is required.

Council discussion Councilmembers asked about the city’s options for reducing reliance on Measure N, the role of grants, and whether an ongoing grants coordinator position should be pursued; staff said a centralized grants position had been proposed but removed from the current budget because of the shortfall and that it could be reconsidered at midyear or next budget year. Councilmembers emphasized the need for ongoing monitoring of sales-tax receipts and frequent updates to the modeling.

No formal votes were taken. Staff said a full numerical budget and a draft spending plan for Measure N would be presented at the May 13 council meeting for further council direction.