Midyear mystery: City Hall has few backups if Measure U fails

Dire economic times compelled Sacramento voters to approve temporary sales tax, but city leaders have come to depend on it

This is an extended version of a story that appears in the February 8, 2018, issue.

Halfway into the fiscal year, the city of Sacramento’s revenue is trending nearly $6 million higher than expected, though that good news was quickly overshadowed by a stark reality.

Barring a sudden windfall from new businesses or legal cannabis, next year’s city budget will face major hurdles if voters don’t reinstate the Measure U sales tax.

That was the message the city’s Budget and Audit Committee received last week from budget manager Dawn Holm.

Measure U, a half-cent sales tax, was passed by votes in 2012 as a temporary measure to plug the loss of services and city jobs tied to the recession. It has generated tens of millions of additional dollars every year since. But Measure U is set to expire in March 2019, a looming deadline that Councilman Jay Schenirer was more than aware of during Holm’s presentation.

“So the bottom line on this is, absent new revenues from a change of Measure U, or cannabis … we have no [new] dollars to spend in the budget we’re beginning to work on?” Schenirer asked.

“That is correct,” Holm said.

She then agreed with Schenirer that the city won’t know how much sales tax revenue from cannabis to expect in time for the next budget.

Mayor Darrell Steinberg stressed that greater economic growth could help fill the deficit if Measure U isn’t reinstated. He also made it clear he plans to lobby hard to get the measure back. Steinberg has a series of town hall meetings scheduled in the coming months. After that, he said, he’ll start the campaign to resell Measure U to voters.

“We’ve not added a lot of ongoing commitments, aside from the labor agreements,” Steinberg said of the council’s recent spending of a surplus on pay hikes. “The out-year numbers are comparable to what we saw last year. We know we have a significant out-year challenge.”