City Facing Financial Challenges of COVID-19

Posted on May 1, 2020

Like many of our local businesses and residentsthe City of Sonoma is facing critical financial challenges from the pandemic and resulting shelter-in-placeCity revenues, like our local economy, are tourism-driven. Hotel taxes (also called transient occupancy tax or TOT) and sales taxes make up the majority of our General Fund, so businesses being shut down or operating below capacity has a significant impact on the revenues used to fund services that our community depends upon. General Fund Revenues

The City is fortunate to have developed healthy financial reserves, including set-asides for both emergencies and economic downturns. Now we are experiencing both. These “savings accounts” give us time to be strategic. While reserves can soften the impact of reductions to programs and services, with the potential for a recession  and the high level of uncertainty, they need to be utilized judiciously to maintain the City’s overall fiscal health. And as we know from past several years, emergencies can and do happen at any time. 

While there are many financial unknownsthe City needs to prepare. We have taken immediate steps to slow spending, and are busy updating budget projections and analyzing costsThe City Council has appointed two members, Councilmembers Harrington and Agrimonti, to an ad hoc Finance and Budget subcommittee to work with staff on reviewing the City’s financial forecast and developing budget strategies and options for the full Council to consider. The Council also appointed a two-member subcommittee (Mayor Harvey and Vice Mayor Hundley) to work with local business organizations (Chamber, Visitors Bureau and Vintner & Growers) on recovery and reopening opportunities.  More specific financial information and options will come forward during the months of May and June for City Council consideration and community input. 

As a community, the level of uncertainty regarding the duration of the economic impacts of the pandemic is especially challenging.  At the City, we will need to be proactive but flexible, setting a course but staying at the financial helm to adjust along the way as we work to serve Sonoma.  


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