Bernie's White Paper

Since 2017 Novato officials have mismanaged town finances. They have wastefully spent or loaned millions and foregone additional millions in revenues.  Now, they seek a sales tax increase without an ending date – a sunset clause. How can taxpayers be sure Novato gets funds it could use while ensuring that the funds are not wasted?   The answer:

 

1. Vote No on Novato’s sales tax Measure M.

2. Insist the Council offer voters a new sales tax measure with a sunset andappropriate guardrails ensuring Novato’s revenues are wisely spent.

3. Insist city officials pursue grants to augment revenues, and operate efficiently, including partnering with other agencies where feasible.
    

Why a sunset clause? A sunset clause is simply practicing good government. It provides an end date for the tax. If there is no need to periodically renew a sales tax, city officials could spend unwisely without concern for the consequences. However, if there is further funding needed after the sunset, officials will want to present a good record to the voters to extend the tax at an appropriate level.

Concluding a tax and then going to the ballot periodically it is the price paid for accountability – and accountability yields better fiscal results. Otherwise, government has a blank check forever.

San Rafael’s sales tax has a sunset clause. Mill Valley’s sales tax measure on this November’s ballot has a sunset even though it is certain that Mill Valley’s needs will not be met during the period before its sales tax expires. The IJ’s July 21,2024 editorial, just before Measure M was adopted by the Novato Council, recommended a sunset clause. Nonetheless, Council refused to adopt one. Council members argued that Novato’s needs were so large that the sales tax would be needed forever. Even if that is correct, a sunset clause is especially needed when there are far more needs than will be met by the sales tax’s initial period, for it promotes accountability.

That is generally true for any government. It is especially true for Novato, given its seven-year history of fiscal mismanagement.

As to the mismanagement, summarized below is the Marin Civil Grand Jury’sJune 2023 report which revealed “lapses in Novato’s financial management to the detriment of Novato and its citizens.”

Since 2017, city officials have not completed any required annual audited financial report on time (it was three years behind at one point). They are still behind. As a result, Novato lost out on over $7 million in federal and state grants, as some grantors require current audited financials, which city officials could not supply.

City officials’ record keeping was so poor they did not know that a portion of the Corporate Yard was on 5 acres of property of the neighboring telecom company. When the telecom company decided to sell all 5 acres, City officials, on an emergency basis, paid $5.8 million, borrowing from Novato’s vehicle fleet fund to help with the payment.

The City Council, by a 3/2 vote, overruled the objections of its Oversight Committee and city staff, and gave SMART $5.5 million to build the Grant Avenue station. The Council borrowed from the Hamilton Trust for funding.When, in October 2022 the Oversight Committee unanimously recommended Novato not to loan a private party $2.1million for 30 years at 2.5%, the Council, by a 3/2 vote overrode the Committee’s recommendation and again used the Hamilton Trust for funding. The next month, the Council again, on a 3/2 vote, overrode another unanimous recommendation to refuse another low interest third-party loan, this time for $3 million.

For over twenty years, the City has let many of its properties go to ruin, without doing anything to use/sell/lease them, even though millions, if not tens of millions of dollars are potentially involved.

City officials neglected to update user fees for 15 years. When done in 2022, revenues increased by $1.2 million annually. So, over those 15 years, Novato may have lost $9 million.

Councils poured nearly $1 million into the failed Novato Theatre.  City officials’ recent actions show they are continuing down the same path.

As a prime example of a lack of transparency, on September 12, 2024, the Council refused to debate with opponents of Measure M.

Early this year the city officials, utilizing consultants paid $207,000, began a campaign, using “push poll” flyers (https://en.wikipedia.org/wiki/Push_poll), mailed to every household to misinform voters into voting for a sales tax increase. The flyers highlighted the 7% share of the property tax city taxpayers received from their property taxes and implied that Novato taxpayers received the lowest property tax share of all 11 Marin cities. What city officials failed to say was that unlike other Marin cities, the city of Novato does not provide fire protection. The Novato Fire District serves us and NFD’s14.5% property tax share benefits Novato taxpayers. When NFD’s share is added to the city’s share, Novato taxpayers receive among the top returns of Marin cities! Plus, other Marin cities also pay for libraries and some sewer services out of their property taxes, while the city does not. You expect city officials to be straight with you. Instead, they are misusing your tax dollars and your trust to get you to vote for higher taxes.

The Council has not offered any sensible reason for excluding guardrails, including a sunset clause in Measure M. The city has a 5-year plan. So, it cannot forecast its needs six years from now, much less 20, 40 or 50 years out.

The Council has refused to provide any benchmarks in Measure M against which voters can measure progress in how Novato manages its finances, as Mill Valley has in its comparable sales tax measure on its November ballot, which has a sunset clause.Instead, the Council lists all kinds of things it could do, without saying that as the sales tax is a general tax the funds can be used for anything and Councils need not do any of those things listed in the ballot and that they could do lots of other things, as the Council sees fit. Council has carefully omitted the six million in unfunded pension liability Novato has accrued as though the sales tax will not be used for paying this obligation.

The Council misleads voters by saying it is providing an independent oversight committee. But under Measure M the City Council has the final say on how all funds are spent. Remember those 3/2 votes? The situation remains the same. Measure M’s reviews by future Councils, starting in the 10th year of the tax are window dressing. The review simply means that whatever Council is then in existence could decide to forego the tax. How realistic is that? Why there need be a 10-year wait is unexplained.

City officials refused to follow some of the Grand Jury’s recommendations. Fortunately, those recommendations can form the basis of guardrails in a new sales tax measure.

The City Manager continues to assert that a failure to pass Measure M will result in drastic cuts to employees and services. This is false.

The Manager and Council know that Novato’s current budget is fully funded through June 2025. If it chooses, Council could cushion future budgets through June 2027 by using funds it has in its reserve account or in several pots of money it has (remember those loans from the Hamilton Trust and the fleet fund?). By then it could propose a better sales tax measure, including omitted grand jury recommendations and a sunset clause.

Finally, Novato need not use a nickel of its funds. Instead, if Measure M fails, city officials could quickly place before voters a sales tax measure with appropriate guardrails by placing the measure on any special election date in2025 (March 4, May 6, August 26 or November 4). And city officials will not have to pay for slick misleading flyers and political consultants. The result will be far superior to the result had Measure M passed.There is no reason to believe that if the Novato receives more taxes that will make Novato fiscally responsible. Submitting Measure M to voters without a sunset clause perpetuates the city officials’ irresponsible behavior. Voters should reject Measure M, and Novato should then promptly proceed to offer a sales tax measure with proper guardrails, including a sunset clause and meaningful oversight. Scare tactics should not form the basis of an argument for a tax measure.