Marin Voice: Novato’s past mismanagement demands strong guardrails for proposed sales tax increase

All indications are that Novato will seek a sales tax increase on the November ballot. The amount and duration of the increase, as well any other conditions, will be decided by the City Council on July 23.

It’s difficult to deny that Novato officials have a history of poor fiscal practices. I suggest that language should be included in any initiative the council adopts.

Novato’s finances are in poor shape, with reserves that may not cover its deficit in 2025-26. Just last year, the Marin County Civil Grand Jury wrote a report aimed to call attention to Novato’s financial missteps. The report was mentioned in recent fliers designed to convince voters to approve a sales tax increase, but it failed to disclose the report’s key findings. The grand jury observed a history of “lapses in (Novato’s) financial management to the detriment of Novato and its residents.” They include:

• Financial mismanagement. As an example, it pointed to mistakes that led to the need to purchase, on an emergency basis, Novato’s Corporate Yard after 30 years of occupancy when the owner decided to sell the property. Novato paid $5.9 million. It also set out a lengthy history of Novato’s mismanagement of its own properties.

• Delayed audits. Novato fell so far behind in completing its yearly audits that, even today, it is still completing audits that were, at one point, three years behind. The lapses reached back to 2018 and continued even while Novato’s auditors repeatedly called out the situation. Last week, city staff estimated that delayed audits cost Novato an average of $1 million per year in possible federal grants for road work alone.

• Spending decisions. Novato has a history of using taxpayer dollars for purposes other than salaries, operations and city properties. Notably, it spent over $4 million dollars on constructing the Sonoma-Marin Area Rail Transit station at Grand Avenue and $1 million on the defunct Novato Theater.

• Questionable loans. The grand jury raised concerns about loans to third parties approved by the council, despite the unanimous advice against doing so by the Finance Committee. There was no criteria for qualification, borrower financial viability or disbursement protocols. The result was a 30-year loan for over $2 million, at 2.5% interest. That’s going to be a burden on Novato’s finances through 2050.

Novato voters must be assured that these shortcomings are adequately addressed before approving any sales tax increase.

I concur that Novato needs more revenue. Considering its property holdings, there is a potential to relieve some, if not all, of the shortfall over time. For this reason alone, a sales tax hike should have a definitive end date. If, upon expiration, additional funds are necessary, Novato should justify any additional tax requests. It is not prudent to grant Novato indefinite authority to impose what is arguably the most regressive form of taxation.

The recent flier asserts that the sales tax increase will be accompanied by “strict fiscal accountability protections.” Novato used a similar promise in support of its 2010 Measure F sales tax, by providing for a citizens oversight committee. But that has clearly proven to be ineffective when the council can, by a simple majority vote, override any advice it receives.

To ensure accountability, provisions must be included for the duration of the sales tax increase so that future councils may not, by a simple majority vote, return to the habits condemned by the report.

• No loans benefitting a third-party should be authorized without the consent of at least four out of five council members.

• Overruling Finance Committee decisions that are unanimous, or nearly unanimous, should require the consent of at least four council members.

• If a yearly audit is incomplete or delayed, neither the city manager nor the chief financial officer should receive any salary increase, or additional compensation for the year.

•  Prior to the approval of a loan by the city, there must be in place a policy that fully authorizes and governs it.

•  The tax measure must have a reasonable sunset.

Let’s learn from history. These provisions will not prohibit the council from engaging in profligate actions, but they will make it harder to do so. Without such guardrails, I would not support a sales tax increase. If you agree, let the council know.

Former Novato Mayor Bernie Meyers served on the City Council from 1991-95 and again from 2001-05.