Jump in tax revenue bolsters budget for disaster-depleted Santa Rosa

April 10-- Apr. 10--Santa Rosa's financial health has taken an unforeseen turn for the better, lending optimism to city officials who had been preparing to cut nearly 50 city positions as early as July.

The revised financial forecast reflects a jump in the city's general reserves, which were severely depleted by the 2017 wildfires.

But property tax revenue came in higher than expected, despite the loss of more than 3,000 homes in the city, officials said. Other factors included state and federal payment of emergency funds for the 2017 fires and a recently approved sales tax hike not included in the city's initial budget forecast last year.

Chuck McBride,, Santa Rosa's chief financial officer, noted Tuesday at a City Council budget briefing that the city was expecting to see property tax revenues reach $30.1 million by the end of the fiscal year June 30 -- $4.3 million higher than expected last year.

"We're still having a hard time explaining how that happened," McBride said.

Brighter forecasts across the board for other taxes and fees put the city on track to collect about $21.6 million more than was previously expected. That amount includes about $2.3 million between April 1 and June 30 from the sales tax hike approved by voters. Going forward, it is expected to generate up to $10 million annually to support city services.

Combined with $15.2 million one-time revenue, including local fees and state and federal payments associated with fire recovery, the city is on track to replenish the reserves it nearly drained in responding to the disaster. Those reserves, which were at risk of dropping below $5 million, are projected to reach by June about $32.4 million -- or about 18% of the overall general fund.

However, with employee- related costs on the rise, including pension spending, the city still faces increasing deficits for the foreseeable future, McBride said. Job cuts this year are still likely in order to stave off a significant hit to the reserves, preserve a good bond rating and ensure emergency funds are available should another major disaster strike, McBride said.

"We're going to focus a lot in this year's budget on financial stability," he said.

The cuts won't go so deep as the roughly 49 jobs included in a previous plan to balance the budget. The council decided earlier this year to freeze hiring on those positions instead of cutting them outright.

Officials referenced six firefighters and two sworn police officers as positions that may be saved as a result of the new forecast, but City Manager Sean McGlynn and other city officials continue to encourage the City Council to reduce the city workforce to curb future personnel costs.

McGlynn also cautioned that future assumptions on employee pension costs -- already climbing sharply -- are based on a much higher rate of return in the stock market than the state pension system is currently realizing. If those returns are not met, taxpayers will ultimately have to pick up the difference.

The brighter budget outlook comes after city voters in November approved Measure O, a quarter-cent, six-year sales tax hike that was billed as a way to stave off sharp cuts to core city services and bolster fire recovery.

It wasn't sold as a permanent solution to the city's structural deficit -- and it shouldn't become one, Councilman Chris Rogers told staff.

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