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Yolo County outlines revenue options to address structural budget gap; sales tax, parcel taxes and property‑tax fixes discussed
Summary
County staff presented a menu of revenue enhancements to address a projected structural deficit, including a legislative fix to property‑tax shares (~$3M estimate), unincorporated sales tax (1% ≈ $6M), potential countywide sales tax (would require state action, 1% could yield $40–50M), utility user tax, parcel/CFD options, and adjustments to cannabis tax policy.
Yolo County’s chief financial officer presented wide‑ranging revenue options Nov. 18 as the county continues to confront a multi‑year structural budget gap.
Tom Haines said the county’s five‑year budget forecast shows structural deficits and noted the 2025–26 budget relied heavily on one‑time solutions and reserves. Haines framed several categories of potential revenue actions for Board consideration and further analysis:
- Property‑tax adjustments: staff identified a possible legislative correction to Yolo’s disproportionate ERAF (Educational Revenue Augmentation Fund) shifts that could increase county revenues by an estimated $3 million annually; another path would be negotiated tax‑sharing agreements with other jurisdictions but would require collaboration and concede revenue from those partners.
- Voter‑approved taxes: options include a 1% local sales tax limited to unincorporated areas (estimated ≈ $6M/year) or a countywide sales tax (state legislative change required; a 1% countywide tax could yield $40–50M). Parcel taxes via community facilities districts and targeted taxes (e.g., transient occupancy tax increases) were also discussed.
- Fees and cost recovery: ideas included enhanced cost recovery, expanding the county's master fee schedule, converting or expanding gravel fees, parking fees at county lots (estimated ≈ $200,000) and charging certain agencies for central administrative cost plan billing beginning in FY 2026–27.
- Other: options to revisit cannabis tax policies (current receipts ≈ $600,000/year) and the Chula Vista property‑tax distributions (≈ $2M/year but temporary) were noted; the CFO also flagged economic development in unincorporated areas as a long‑term path to increase property and sales tax bases.
Board members asked who would vote for sales‑tax measures (unincorporated voters for a rural‑only tax; all county voters for a countywide measure) and raised concerns about equity, impacts on residents and timing. Staff emphasized that most options require additional legal and fiscal analysis and, in many cases, voter approval.
Next steps: staff will return with more detailed data and policy options for Board review and recommended further work with the budget ad hoc and the county’s legislative delegation for any state‑level fixes.
