Commentary: Budget planning in uncertain times

In 2020, Petaluma voters passed Measure U, a one-cent sales tax. It allowed us to invest in infrastructure and parks, and reestablish adequate staffing in our police, fire, and public works departments.

However, while Measure U helped us avoid bankruptcy, it was not a golden egg. We still have hundreds of millions of dollars of deferred maintenance and remain heavily reliant on funding from our federal, state and county governments.

Unfortunately, this year’s budget has financial challenges and risks that we have not experienced since Measure U passed in 2020.

The combination of inflation and a few key businesses leaving town has caused our sales tax forecasts to be about $4 million below prior years. The potential for significant import tariffs on everything from construction materials to food and fossil fuels could drive sales tax down even further. This is a serious threat that we must be prepared for.

Beyond the decreased sales tax revenues, President Trump’s attempts to freeze federal funding puts millions of dollars at risk. These federal dollars pay for things like public transit, Meals on Wheels, staffing at our homeless shelter, and Rebuilding Together’s home repair program. Beyond operating funding, we also have also been promised a $1 million grant to create a fairgrounds master plan as well as a promise from the Army Corps to dredge our river.

To be clear, if the federal government refuses to fund our Meals on Wheels program – a program that delivers 10,000 meals per year to Petalumans in need – your city council is going to find a way to feed our community. But meeting that need, and preparing for the laundry lists of other threats, means the city must tighten our belt and prioritize economic development.

The truth is that we do not know how bad it could or will get. Cities like Oakland recently laid off hundreds of people while others are freezing open positions in anticipation of hard times. A judge may have temporarily blocked President Trump’s funding freeze, but the courts cannot stop the agencies from grinding the processing and payment of funds to a halt.

We should all hope for the best, but your city staff and city council must be preparing for the worst and looking at all measures to increase revenues and control costs. That is exactly what we are doing.

Right now, we are racing to fill empty storefronts. Our Economic Development Department is engaging property owners and working with our partners at the Downtown Association and the Chamber of Commerce to attract new businesses to town. In parallel, our Community Development Department is working to streamline the permit process and minimize the time and cost of opening or expanding a business here.

We are also working to bring new businesses to town. We are processing applications for vacant storefronts in multiple shopping centers, including the old K-Mart building. While long overdue, we will soon open retail cannabis shops in the city and stop leaking revenues to Cotati and the county – something that estimated to generate about $500,000 per year in direct tax revenues.

In downtown, we are trying to get more feet on the street. The proposal for a new downtown hotel will transform a blighted old gas station site into thousands of new customers who – each year – will spend millions of dollars at downtown businesses and generate $700,000 in direct tax revenue to the city.

Beyond being more business friendly, we are also updating our General Plan, zoning code, and impact fees to attract more housing and grow our tax base.

While our situation is not as dire as other cities, Petaluma is no stranger to financial crisis. Your city council and city staff remember our pre-2020 financial struggles well – and we never want to see Petaluma in that position again.

Despite our best efforts to bolster our revenues and control costs, a few bad court decisions and a trade war could put us in a tough spot. To be resilient in these uncertain times, we must double down on our partnerships with neighboring cities, the county, and the state.

Brian Barnacle is a member of the Petaluma City Council.

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