San Rafael outlines fiscal sustainability plan, recommends June renewal of Measure D

San Rafael — City finance staff on Feb. 2 presented a fiscal sustainability framework that shows an emerging structural deficit beginning in fiscal year 2026–27 and growing thereafter, and asked the council for guidance on a revenue-measure strategy that starts with a June renewal of Measure D (the library parcel tax).

Finance Director Paul Navazio said the baseline general-fund forecast shows a structural deficit in the $2 million–$3.5 million range starting next fiscal year, growing in subsequent years if no corrective action is taken. The forecast assumed renewal of the library parcel tax; staff warned the general fund could be drawn down without new revenue or expenditure recalibration. Key pressures identified included rising utility and insurance costs, equipment and deferred-maintenance backlogs, stormwater and street funding shortfalls, and long-term pension liabilities.

Staff recommended a two-step near-term revenue strategy: (1) proceed in June with a straight renewal of Measure D to preserve $1.2 million in annual library funding; (2) evaluate a November revenue-enhancement option (examples discussed included a property-transfer tax or a dedicated public-safety parcel tax) and longer-term consolidation of sales tax measures in 2028. Staff also presented work on diversifying revenue (hotel-tax allocations, cannabis tax evaluation and Prop. 218 stormwater-fee options) and sequencing of ballot measures.

Poll results presented by FM3 Research (Kurt Baylo) showed a measured viability for a nine-year library-parcel-tax renewal: roughly 67% support including leaners, a level that is near the two-thirds approval threshold. Message testing indicated the strongest voter rationales for support were protecting library staff and services for children and technology access; top negatives were cost-of-living and tax sensitivity.

Council action: The council received the presentation and staff said they will return with recommended language for a June Measure D renewal to meet county deadlines. No ballot measure was placed on the ballot Feb. 2.

Next steps: Staff will refine the five-year forecast, follow the finance subcommittee schedule, continue polling and community outreach, and bring draft language for Measure D back to council in the next meeting cycle if council supports moving forward.