'There are overlapping needs': Yuba City and Sutter County to seek joint sales tax measure

Dec. 20—In an effort rarely seen between two government bodies, Yuba City and Sutter County will join together to pursue a general sales tax measure in the November 2024 election in hopes of addressing public safety and infrastructure needs for all Sutter County residents.

The Yuba City City Council and Sutter County Board of Supervisors held a special meeting on Tuesday to present updates from their respective Revenue Ad Hoc committees, which were formed to explore potential revenue measures and define priorities for both entities. Yuba City City Manager Diana Langley said that the committees held three meetings within the last year and underwent mediation in late November with retired Major General Jake Polumbo acting as the facilitator.

After several discussions in the last year, city and county officials ultimately recommended that both entities should combine their efforts to pursue a 1% general sales tax measure. Sutter County Administrator Steve Smith told the Appeal that the measure in all likelihood will only be voted on by Yuba City residents and that only purchases made in Yuba City will be affected by the additional tax. Should the measure pass, the city will engage in a revenue share with Sutter County, and the measure will remain in effect until overturned by voters.

According to Langley, a 1% sales tax measure would generate $15 million annually. In comparison, a 0.25% tax would generate $3.25 million while 0.5% would bring in $7.5 million. Langley also directed attention to the fact that Yuba City is one of eight municipalities statewide with a population over 50,000 that still maintains a sales tax rate of 7.25%.

"What this reflects is just a need for cities to develop additional revenue sources to be able to supply and provide city services," she said.

In its exploration of possible revenue measures, Yuba City has identified road conditions and public safety as funding priorities. In their current state, Yuba City roads need approximately $150 million in deferred maintenance. Meanwhile, the city's annual road repair budget sits at $1.5 million. In order to keep roads in their current condition, Yuba City would need $11.5 million per year to address maintenance needs. To improve them, the city needs $18.5 million per year, Public Works Director Ben Moody previously said.

For the city's police and fire departments, Langley previously said that both departments have equipment, facility and personnel needs. However, the city is placing a specific emphasis on maintaining staffing and service levels.

The Yuba City Fire Department has been able to address some of its personnel and equipment needs through the Staffing For Adequate Fire and Emergency Response (SAFR) grant including a new ladder truck at Fire Station 3 and an additional staff member, who has been "invaluable" to the department's ability to address fire emergencies, Langley said.

SAFR grant funds are slated to end in the 2024/25 fiscal year, but additional personnel have been hired for permanent positions, Langley said. The city would need approximately $538,000 to continue funding for these hires.

The city also aims to increase homelessness response efforts through the police department and possibly take over service for the Walton Avenue/Happy Park service area known as Beat 6 to the department and city residents.

The coverage zone sprawls south of Franklin Road to Bogue Road. Despite this area being incorporated into Yuba City, it remains under the jurisdiction of the Sutter County Sheriff's Office. Yuba City Police will provide service for this area once it passes a population threshold per a longstanding master tax exchange agreement between the city and county.

Yuba City has expressed a "strong desire" to take over county services that directly impact city residents such as the Sutter County District Attorney's Office, the Sutter County Jail and homeless response efforts, Langley said.

On the other end of discussions, Sutter County has long since identified public safety as a funding priority. In its effort to pass Measure A, a one cent sales tax measure that was on the 2022 ballot, Sutter County officials previously said sales tax for a period of nine years would have raised about $19 million a year in revenue for the county — revenue that would have been split between the county and Yuba City with another small percentage going to Live Oak.

Since the failure of Measure A, which saw 51.61% of voters voting against and 48.39% of voters voting for, the county has had to navigate through budgeting issues within its sheriff's department and other county services. County officials also estimated that Sutter County will have a projected ongoing operating deficit of approximately $12 million a year by fiscal year 2027/28.

Smith previously told the Appeal that while the county is trying to avoid cuts to emergency services, some departments like County Service Area F are not generating enough funds to continue current service levels. Fire services being reduced in rural areas is not outside the realm of possibility if the county fails to generate revenue, he said.

During Tuesday's meeting, Smith said that the sheriff's department and subsequent services remain a priority for the county as it pursues a new revenue measure. Staffing for the county jail, the Sutter County District Attorney's Office, public defenders and county fire departments were especially highlighted.

"It's very expensive to run a law enforcement agency, and particularly a jail. Over the past 11 years since public safety realignment was implemented by the state, turning local jails into local prisons, jail medical has gone from about $380,000 per year to $4 million. Jail staffing and those costs are a priority as well. ... It would also be advantageous to have a dedicated homeless deputy out of the sheriff's office who could go to locations like the river bottoms to ensure that residents are able to recreate there as opposed to being worried about possible illegal encampments," Smith said.

City and county officials expressed a desire to cooperate leading up to Tuesday's meeting in order to avoid placing competing measures on the November ballot. Yuba City Councilmember Marc Boomgaarden said the new arrangement announced Tuesday between both entities is exceedingly rare in California.

"The best negotiations happen when both sides try to give the other what they want as much as possible. That's the premise that the mayor and I went into: knowing that there are needs and there are overlapping needs. When you adopt that philosophy, then you realize that working together, we're going to achieve a lot more than we would by being selfish," Boomgaarden said. "This may very well be the first type of relationship or tax measure in the state of California. It's been represented by others that this is something that is not the norm, and if approved, I think is a good testament to the folks elected to represent the citizens of this county."

John Cassidy, the former CEO of Sierra Central Credit Union, thanked the Yuba City City Council and Sutter County Board of Supervisors for their collaboration and highlighted road improvements as a significant need for all county residents.

"This is going to be a unique situation we have here. We have a lot of safety issues with our roads and you guys are stepping up. We've got to at some point address it because it just keeps getting further and further away the more time we wait. I think the way you guys have solved the issue is amenable and proper and appropriate," Cassidy said. "No one here likes to get taxed. No one wants to pay more than they have to, but all you have to do is drive out here on Butte House Road and go boom, boom, boom. This community was built for 8,000 to 10,000 people and we've got 100,000 people driving on our roads. It doesn't matter if you're driving in the county or city. It's a problem."

Next steps

According to Yuba City Mayor Shon Harris, the revenue sharing model will adhere to a master tax exchange agreement, which would be contingent on approval from voters. The city council and board of supervisors will outline the financial split, parameters for use of funds and triggers for renegotiation and termination.

"We have to be very careful because this is going to be a general (tax) not specific, so we can't say, 'You shall spend this money on this item,' otherwise we won't qualify," Harris said.

The financial split is anticipated to sit at 67% to 33%, with the city receiving the majority of the revenue. Using a potential first year revenue base of $15 million, Yuba City would receive $10 million while Sutter County would receive $5 million.

In the event of a revenue overage, surplus funds would be split 50-50 between the city and a joint projects fund, which would be dedicated for mutually agreed upon projects benefiting both the city and county, Harris said. An example of a joint project would be the ongoing traffic improvements to the Highway 99 and Oswald Road intersection.

"Is (Oswald Road) in the city of Yuba City? No, but does it benefit the citizens of Yuba City and make it safer? Absolutely it does," Harris said. "Maybe we want to improve the library or the museum. We would decide on something that's mutually beneficial to both county and city."

An Ad Hoc committee composed of county and city representatives as well as a citizens advisory committee would be appointed to help determine joint projects and what to do with extra funds.

Overage funds could also be used to maintain new base funding levels in the future should a tax measure generate fewer funds than the previous year.

"Say in year number one, we do receive an overage, which would be $17 million. That's the base from now on. We divide it again 67-33% and you have, in this example, right back what it was before: 50% Yuba City and 50% joint projects fund. Now if, for example — this only works from year three and on — it goes below the new base of $17 million. We receive less than $17 million, what we have stashed in that joint projects fund would be used to bring everybody whole back to the $17 million base line," Harris said.

As the city and county move forward with a general sales tax measure, Langley said that officials will meet to discuss the terms of a tax sharing agreement and clarify priorities as allowed. They will also attempt to generate public support in preparation for the November 2024 election.