How are City revenues being affected by the pandemic?

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.

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