To: Sonoma County Board of Supervisors
Department or Agency Name(s): County Administrator’s Office, County Counsel, Auditor-Controller-Treasurer-Tax Collector
Staff Name and Phone Number: Maggie Luce 707-565-1796, Kristin Horrell, 707-565-2421
Vote Requirement: 4/5th
Supervisorial District(s): Countywide
Title:
Title
Measure H (Fire Sales Tax) Funding Agreements
End
Recommended Action:
Recommended action
A) Authorize County Executive or designee to execute funding agreements and necessary amendments with non-County recipients of Measure H tax proceeds. (Majority)
B) Adopt a resolution adjusting the Fiscal Year 2024-2025 Revised Budget for Non-Departmental to establish appropriations needed to implement receipt and distribution of County Measure H Fire Sales Tax proceeds to fire agencies in accordance with approved funding agreements. (4/5th vote)
end
Executive Summary:
On March 5, 2024, the voters of Sonoma County approved Measure H, “The Improved and Enhanced Local Fire Protection, Paramedic Services and Disaster Response Transactions and Use Tax Ordinance,” a one-half cent sales tax to provide funding to Sonoma County fire agencies for the purpose of achieving effective and efficient regional fire response services throughout the county. The County is charged with a fiduciary duty in administering the tax proceeds according to applicable laws and the Ordinance, and the Ordinance requires a funding agreement between the County and all local agencies receiving tax proceeds prior to any tax proceeds being distributed. Staff requests Board approval for the County Executive or designee to execute these funding agreements and any necessary amendments. The first distribution of tax proceeds is expected to be disbursed by March 10, 2025.
Discussion:
Background
On September 26, 2023 <https://sonoma-county.legistar.com/LegislationDetail.aspx?ID=6361588&GUID=8CF11D3C-B5D9-4DEC-AD0F-A50ED85A18B4&Options=&Search=%3E,>, the Board of Supervisors adopted a resolution calling a special election for March 5, 2024, on the proposed sales tax measure entitled, “Improved and Enhanced Local Fire Protection, Paramedic Services, and Disaster Response Initiative and Sales Tax Petition” (Measure H), and combining the special election with the statewide election on March 5, 2024. Measure H was approved with 61.71% of voters approving a one-half cent sales tax on the sale and use of tangible property within Sonoma County, including both incorporated and unincorporated areas, until ended by the voters, to supplement existing funding for wildfire prevention and preparedness, paramedic services, and emergency and disaster response, raising approximately $60,000,000 annually. The new sales tax became operative as of October 1, 2024. On January 14, 2025 <https://sonoma-county.legistar.com/LegislationDetail.aspx?ID=7085820&GUID=12C03924-4551-479E-A16B-450D651EA4A4&Options=&Search=>, the Board established the Oversight Committee, which is charged with implementation of the Ordinance and shall provide transparency and ensure fiscal accountability. The Measure H Ordinance (“Ordinance”) is attached as Attachment A.
Funding Agreement Provisions
The County of Sonoma is charged with a fiduciary duty in administering the tax proceeds generated by the Ordinance. Prior to any tax proceeds being distributed to the local agencies receiving tax proceeds (“Recipients”) as set forth in the expenditure plan of the Ordinance (“Expenditure Plan”), a funding agreement is required between the County and each Recipient.
Each funding agreement includes, non-exhaustively, the following provisions:
• The allocation of tax proceeds the Recipient is receiving pursuant to the Expenditure Plan (Section 12-66), which is intended as a specific and legally binding and enforceable limitation on how the proceeds of the tax imposed by the Ordinance may be spent;
• The schedule within which the County’s Auditor-Controller-Treasurer-Tax Collector will disburse the tax proceeds;
• The baseline maintenance of effort, which will include the proportional allocation as set forth in Section 12-65 to ensure tax proceeds are not being used to supplant historical general fund contributions; and
• The baseline personnel funding, which will include the revenues used to fund existing personnel as set forth in Section 12-68(A) in order to establish the baseline for measuring compliance with the requirement that sales tax proceeds shall only be used to pay for additional personnel, and in some instances, retention of personnel;
• The reporting requirements each Recipient must provide annually to the Oversight Committee (Section 12-67(B));
• Establishing a 30-year limit on bonded indebtedness; and
• An acknowledgment that Measure H provides funding to achieve effective and efficient regional fire response services throughout Sonoma County.
Not all funding agreements presented today have the baseline financial information for maintenance of effort included, due to the complexity in calculating the baseline numbers. The County and some Recipients therefore intend to execute amendments to these funding agreements to include the baseline financial information at a later date, but prior to the annual report that is required pursuant to Section 12-67(B). Additionally, there are fewer funding agreements than there are Recipients in the Expenditure Plan. This is due to fire agency reorganizations and the requirement that any allocation of tax proceeds enumerated to a local agency under the Expenditure Plan that has been consolidated with or annexed by another local agency shall go to the successor agency.
Funding Agreements to Be Executed
Funding agreements are required for each of the following Recipients:
1. City of Healdsburg
2. City of Petaluma
3. City of Rohnert Park
4. City of Santa Rosa
5. City of Sebastopol
6. City of Sonoma
7. Cazadero Community Services District
8. Cloverdale Fire Protection District (including the City of Cloverdale)
9. Gold Ridge Fire Protection District
10. Graton Fire Protection District
11. Kenwood Fire Protection District
12. Monte Rio Fire Protection District
13. North Sonoma Coast Fire Protection District
14. Northern Sonoma County Fire Protection District
15. Occidental Community Services District
16. Rancho Adobe Fire Protection District (including the City of Cotati)
17. Schell-Vista Fire Protection District
18. Sonoma County Fire District (including the Town of Windsor)
19. Sonoma Valley Fire District
20. Timber Cove Fire Protection District
21. Sonoma County Chiefs Association
The majority of these funding agreements are included in Attachment C. Any of the enumerated agencies whose funding agreement is not included with this item will be brought to the Board at a later date and must be executed prior to any tax proceeds being disbursed to that local agency.
In addition to the enumerated funding agreements, a Memorandum of Understanding will be executed by the Fire Prevention and Hazmat Division of Permit Sonoma, which receives 0.42% under the Expenditure Plan, and the Auditor-Controller-Treasurer-Tax Collector, which receives a 1.0% administrative allocation under the Expenditure Plan.
In the event that the entirety of funds from the Measure H Tax Account cannot be distributed according to the schedule set forth in the Expenditure Plan, all remaining funds shall be distributed to REDCOM, at which point a funding agreement with REDCOM will be brought to the Board for approval.
The first distribution of tax proceeds is expected to be disbursed to all Recipients with an executed funding agreement no later than March 10, 2025.
Strategic Plan:
N/A
Racial Equity:
Was this item identified as an opportunity to apply the Racial Equity Toolkit?
No
Prior Board Actions:
9/26/23 <https://sonoma-county.legistar.com/LegislationDetail.aspx?ID=6361588&GUID=8CF11D3C-B5D9-4DEC-AD0F-A50ED85A18B4&Options=&Search=%3E,>: Adopt a Resolution submitting the Improved and Enhanced Local Fire Protection, Paramedic Services, and Disaster Response Initiative and Sales Tax Petition to the Voters of Sonoma County
9/12/23 <https://sonoma-county.legistar.com/LegislationDetail.aspx?ID=6338188&GUID=927F17A6-F5F9-4774-8CAB-6B50A3FC9F45&Options=&Search=>: Accepting Certificate of Sufficiency for the Improved and Enhanced Local Fire Protection, Paramedic Services, and Disaster Response Initiative and Sales Tax Petition
Fiscal Summary
|
Expenditures |
FY23-24 Adopted |
FY24-25 Adopted |
FY25-26 Projected |
|
Budgeted Expenses |
|
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$65,707,417 |
|
Additional Appropriation Requested |
|
$47,148,833 |
|
|
Total Expenditures |
|
$47,148,833 |
$65,707,417 |
|
Funding Sources |
|
|
|
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General Fund/WA GF |
|
|
|
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State/Federal |
|
|
|
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Fees/Other |
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$47,148,833 |
$65,707,417 |
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Use of Fund Balance |
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General Fund Contingencies |
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Total Sources |
|
$47,148,833 |
$65,707,417 |
Narrative Explanation of Fiscal Impacts:
The estimated sales tax revenue proceeds for the October 2024 through June 2024 period in FY 24-25 is $47,148,833 and $65,707,417 for the full 12-month period in FY 25-26. Anticipated FY 24-25 expenditures include $46,677,345 for sales tax distributions to the agencies listed above per their funding agreements, increasing to an estimated $65,050,343 in FY 25-26. Sales tax distributions to agencies will be based on actual receipts in any given fiscal year, not the assumed budget. In addition to pass-through distributions, FY 24-25 expenditures also include $471,488, equal to 1% of receipts, to pay for California Department of Tax and Fee Administration fees, local Oversight Committee costs, Auditor-Controller-Treasurer-Tax Collector client accounting services, and sales tax consultant costs. In FY 25-26, the administrative fees and costs equal to 1% of receipts is anticipated to increase to $657,074. There is no General Fund impact.
In addition to the requested adjustment to the Non-Departmental budget in FY 24-25, additional appropriations adjustments may be needed in budgets for ACTTC or Permit Sonoma. Any needed adjustments would be handled as part of the quarterly consolidated budget adjustment process. Future fiscal year revenues and expenditures will be incorporated into the County’s annual recommended budgets.
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Staffing Impacts: |
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Position Title (Payroll Classification) |
Monthly Salary Range (A-I Step) |
Additions (Number) |
Deletions (Number) |
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Narrative Explanation of Staffing Impacts (If Required):
N/A
Attachments:
1. Attachment A - Measure H Ordinance
2. Attachment B - Budget Adjustment Resolution
3. Attachment C - Funding Agreements
Related Items “On File” with the Clerk of the Board:
None