City Budget

The Finance Department is primarily responsible for the development and preparation of the City of Sonoma’s proposed annual Operating and Capital Budget.  The City Council adopts a budget each June for the following fiscal year, which runs from July 1 to June 30.  The annual budget is a policy document which sets the financial course for the City of Sonoma and defines the service priorities provided to the community.

Financial Planning in COVID-19 strategy of Act, Monitor, AdjustFiscal Year 2020-2021 Budget Information:

The COVID-19 pandemic is significantly impacting our local economy, our City revenues, and the services that our community needs.  With so much uncertainty as to what the future will bring, the City of Sonoma is focused on supporting our community throughout this public health and economic crisis, and setting a flexible course of action for funding city services.

The adopted budget for FY 2020-21 includes significant spending reductions that have been implemented immediately.  Key revenues like hotel taxes are being closely monitored. Financial reserves will help supplement funding for operations until more is known about the fiscal outlook for the coming year.  By using an approach of "ACT -> MONITOR -> ADJUST", the City can preserve its capacity to provide core services and respond to community needs.

This year's budget development process was not typical, and because the budget is likely to undergo modification over the coming months, a traditional budget document has not been prepared. Instead, budget information can be found in the following documents as well as monthly updates on the City Council agenda:

Budget graphic- FY 20-21 "BUDGET IN BRIEF" Summary
- City Council Budget Adoption 6-29-20 agenda report
- City Council Budget Adoption 6-29-20 presentation
- City Council Budget Workshop 6-22-20 presentation

To see past adopted budgets, comprehensive annual reports (CAFR) and audits, visit our Financial Documents page.

Budget FAQs

With its tourism-based local economy, the City of Sonoma relies on revenues that are being significantly impacted by the coronavirus pandemic.  The most greatly affected are hotel taxes (called Transient Occupancy Tax or TOT), which had previously been generating almost 24% of  total General Fund revenues.  Prior to the pandemic, annual TOT revenues were on track to reach $4.8 million, but the FY 20-21 budget includes projected TOT revenue of less than half this amount.

Like TOT, sales tax revenues are highly impacted by tourism. Restaurants comprise the largest sales tax-generating segment of local businesses. In addition to a share of the statewide sales tax, the City of Sonoma has had a local voter-approved half-cent (0.50%) sales tax in place since 2012 (this tax is on the ballot for renewal in November 2020 as “Measure V”). Prior to the pandemic, these sales taxes generated $6M or almost 30% of the City’s General Fund revenue. Total sales taxes for FY 20-21 are projected at more than $1 million below pre-pandemic levels.

Other revenue sources, such as property taxes, have less short-term volatility and will offset losses slightly. However, in total, the FY 20-21 budget projects a decrease of almost $3.3M (or 16%) in total General Fund revenue from the FY 19-20 adopted budget. Finance staff are tracking TOT and other revenues closely and are providing monthly updates to the City Council.

Learn more at the City Budget page.

With revenues down significantly, the adopted budget is balanced through a combination of spending reductions and use of financial reserves or “rainy day funds”.  At $19.3M, the FY 20-21 adopted budget for General Fund expenditures is about $2M below the amount forecasted for “status quo operations”, and $1.1M below the pre-pandemic budget for FY 19-20.

Impacts on City services from this level of budget reductions are unavoidable. However, these cuts were designed and implemented in ways to minimize the effects on the community. Further budget reductions, if needed, would likely require significant changes in the level and/or scope of services provided by the City.

FY 20-21 budget reductions include:

  • Reduction of three full-time positions (including one officer) and the K-9 unit in the Police services contract.
  • Reduction in neighborhood park maintenance through eliminating contract services and bringing maintenance of all parks in-house, with no increase in staffing.
  • Reduction of 23% in funding for the Recreation and Community Services Program (the funding for these services is based on a percentage of the City’s largest revenues)
  • Elimination of almost all General Fund support for Capital Improvement Program projects.
  • 50% reduction in contributions to funds for vehicle replacement and long-term building maintenance (100% of contributions for FY 19-20 were eliminated as part of the budget reductions for that year).
  • Salary savings from an agreement with City’s management and part-time staff to forgo a 3% increase for FY 20-21.
  • Other reductions include significant cuts to the non-personnel budgets for all operating departments (including the Fire/EMS service contract), reduction to the Legal Services budget, and continued deferral of several one-time projects.

Learn more at the City Budget page.

Keeping our community safe is the City’s highest priority. This includes local businesses and their employees. City staff assignments have shifted to prioritize public education and enforcement regarding Coronavirus related health orders, as well as community support projects such as the food security task force.  The City Council allocated $150,000 from the City’s Housing Trust Fund (funded by a portion of hotel tax revenues) for rental assistance provided by Friends in Sonoma Helping (FISH).

City staff have been working closely with economic development partners at the Chamber of Commerce and Sonoma Valley Visitors Bureau, as along with the Sonoma Valley Vintners and Growers Association, to maintain close communication with the local business community as Coronavirus guidelines change and as resources become available.  A City Council subcommittee is leading an effort to work with businesses to temporarily add or expand their outdoor service options to accommodate Coronavirus related health standards.  This allows businesses to remain open while maintaining safe areas for pedestrians. Learn more from this September 9, 2020 report to the City Council on the City’s Business Expansion & Recovery Efforts including the Promenade, Parklets and Parking Augmentation Ideas.

As a result of years of fiscal prudence, City has developed healthy financial reserves, which function as savings accounts or “rainy day” funds.  The Emergency Reserve (target level = $1.5 million) helps fund the costs of responding to a major fire, earthquake, or pandemic. The purpose of the Operating Reserve (target level = amount equal to 17% of annual operating expenditures)  is to help mitigate the effects of economic downturns on City services and allows time to adjust operations accordingly. Any remaining reserves are available for one-time projects and/or to restore the emergency and operating reserves to their target levels.

Total General Fund reserves at the beginning of FY 20-21 are estimated at $8M (the amount is finalized after completion of the annual financial audit).  Along with significant spending reductions, the adopted budget for FY 20-21 projects the use of $2M in operating reserves to balance the loss of revenues, which would draw the total reserves down to $6M by year’s end.

Learn more about the City’s reserve policies at the Financial Documents page.

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