At last week’s City Council meeting, City Manager Amy Cunningham delivered a comprehensive update on Novato’s fiscal sustainability. Her presentation highlighted the City’s ongoing efforts to manage expenses and improve the revenue outlook to address the increasing budget deficit while working to preserve service levels. She also addressed funding priorities for critical needs, including deferred infrastructure such as streets, parks and other capital assets.
Cunningham’s update included an overview on Measure M, which proposes a ¾¢ increase to Novato’s local sales tax, unanimously placed on the November 5 ballot by the City Council, as well as recommended funding priorities and a five-year general fund forecast emphasizing Novato’s ongoing fiscal challenges. Without significant changes to revenue or expenses, Novato’s emergency reserves will be insufficient to maintain current service levels by fiscal year 2026/27.
“Over the past two decades, Novato has eliminated over 30 staff positions to reduce expenses, which has had a notable impact on the level of service we provide to our community,” said City Manager Cunningham. “As a result, millions of dollars in deferred maintenance have built up, jeopardizing the City’s long-term financial stability.”
In addition to staffing reductions, efforts to stabilize the City’s finances over the years have included short-term solutions, such as seeking one-time funding from the sale or lease of city-owned property, deferring maintenance and relying on one-time funding including American Rescue Plan Act funds. Updating the City’s fee schedule for user-based services to align with increasing expenses, restructuring service delivery, reviewing Internal Service Funds and adjusted rates to improve cost recovery, and placing Measure Q on the November 2020 ballot to increase the local hotel tax have also been implemented to generate revenue for Novato.
In continued efforts to manage City assets effectively, the City recently issued a Request for Quotes and Information for Professional Real Estate Advisory Services. The strategic plan goal aligned with this RFQ aims to evaluate city-owned properties to identify their best and highest use, including potential lease or sale. The City Council also recently adopted a “No Loan” policy prohibiting General Fund loans to outside organizations and updated its investment policy to improve returns.
“Novato’s current fiscal trajectory is unsustainable, and our community has already begun to feel the effects in the form of deteriorating roads, deferred maintenance and delays in requests for services around town,” Cunningham said. “Staff has done an excellent job in maintaining services despite limited resources. The budget challenges we are facing as a community are the result of rising costs and years of short-term solutions put in place to address long-term needs. Without structural changes, Novato’s fiscal health and City services will continue to weaken.”
Watch City Manager Cunningham’s presentation
