A Revenue Plan Based on Shared Burdens
Building a Resilient St. Helena: A Balanced Approach to Revenue and Governance
It has become increasingly clear that to maintain and enhance the quality of life we all cherish in St. Helena, we must come together as a community to address our financial challenges. The solution lies not in drastic measures or single-point fixes but in a comprehensive, balanced approach. By diversifying revenue sources, ensuring equitable contributions, and reinforcing accountability in city governance, we can secure a sustainable future while preserving the unique character of our town.
The structural deficit, a term frequently used in city discussions, refers to the gap between recurring revenues and the expenditures necessary to sustain current operations and services. While this gap has been cited as $7 to $10 million annually, further analysis reveals that this figure conflates two categories of costs: essential services and aspirational investments.
Clarifying the Structural Deficit
Essential Services: These are costs required to maintain St. Helena’s current operations, including police and fire services, road and infrastructure maintenance, and core administrative functions. This portion of the structural deficit is estimated to be approximately $1.5 to $2 million annually, reflecting the true funding gap needed to sustain existing services.
Aspirational Investments: These are enhancements or expansions to services and infrastructure, such as adding new staff, increasing salaries to market levels, or funding community projects like recreational trails. Aspirational investments account for the remaining $6.5 to $7 million annually. While these goals are desirable, they represent optional expenditures and should not be confused with the immediate operational needs of the city.
Understanding this distinction is critical. Residents might support aspirational investments, but they deserve clarity about the associated costs and how these goals will impact their taxes, fees, and the overall affordability of living in St. Helena.
Why Sharing the Burden Matters
A shared approach to addressing the structural deficit promotes equity, stability, and community benefit.
Equity and Fairness: By spreading the financial responsibility across multiple constituencies, including residents, businesses, and the city government, we ensure that no single group bears an undue burden. This approach fosters a sense of fairness and shared purpose.
Stability and Predictability: Diversifying revenue sources reduces reliance on any one area, minimizing risks from economic downturns and ensuring more stable funding for essential services.
Comprehensive Community Benefits: Revenue generated will be allocated to critical public services, infrastructure maintenance, and community development projects that benefit all residents.
Key Areas of Contribution
1. City Government Transformation
Between 2014 and 2024, St. Helena’s city staff doubled to 93.5 full-time and part-time employees, even as the town’s population shrank by more than 1,000 residents. While some of this growth reflects critical needs like fire services, the overall expansion warrants review. A targeted 5% reduction in the overall budget, or approximately $1 million, could be achieved through:
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Consolidating redundant roles and cross-training staff, including at senior management levels.
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Automating routine tasks to improve efficiency and reduce manual labor.
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Offering early retirement packages to reduce workforce size without layoffs.
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Continuing to outsource non-core functions like payroll and park maintenance were cost-effective.
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Reassessing staffing needs in public safety units to balance cost and service quality.
2. Parcel Tax to Secure the Library
A modest $285 parcel tax would generate $1.1 million annually to create a dedicated fund for library operations. This measure ensures the long-term sustainability of the library, often regarded as the heart of the community, without diverting resources from other priorities.
3. Local Business Contributions
Adjustments to the sales tax (0.25%) and business license tax (0.25%) would yield $1.9 million annually. These small increments balance contributions from local enterprises with the inherent risks business owners assume, fostering a mutually supportive relationship between the city and its businesses.
4. Tourism and Hospitality
A 1% increase in the transient occupancy tax (TOT) would generate $450,000 annually, with the burden falling on visitors staying in hotels, motels, and short-term rentals. This measure leverages the economic benefits of tourism to support local services.
5. Expanding Short-Term Rental Licenses
Currently capped at 25 licenses, short-term rentals (STRs) generate significant revenue with minimal community complaints. By increasing the cap to 50, the city could see an additional $350,000 in TOT revenue. This measure would include robust safeguards, such as prioritizing local ownership and strict enforcement of rules to address resident concerns.
Total Revenue Generated: 4.8 million
*We own a monthly rental, have no interest in turning it into an STR and pledge to not take advantage of this on a personal basis if changes are adopted.
Balancing Costs and Community Values
While these proposals include increased taxes and fees, they are designed to balance financial responsibility with affordability. The goal is to preserve St. Helena’s unique character without making it unaffordable for middle-class families and long-term residents. Investments in long-term revenue sources, such as hotel development and annexations, remain important but will take years to materialize. In the meantime, immediate solutions must address current needs without overburdening residents.
The Financial Picture
Combined, the proposed measures—including government transformation, targeted taxes, and expanded revenue from tourism and rentals—could generate approximately $4.8 million annually. This represents a significant step toward bridging the essential funding gap.
Benefits for All
This balanced approach is about more than raising revenue; it’s about investing in St. Helena’s future while maintaining transparency and fairness. By addressing the structural deficit with a mix of essential and aspirational solutions, the city can preserve the quality of life we all value while creating a sustainable financial path forward. Residents deserve clarity on what the city’s financial situation truly is—and isn’t—so we can make informed decisions about the future of our community.
Together, through shared sacrifice and mutual support, we can achieve our goals and continue to build a bright future for all. I would propose these measures are grouped together for majority vote (outside of STR, which can be enacted by council agreement) and parcel taxes as they require 2/3rd's majority vote.
Still Under Research: Vacancy Parcel Tax
There is an old saying in private industry that companies always fund what they actually believe in. If there is no funding, it's just words on the wind. The same can be transferred to government. What do we believe in? I have heard, and believe myself, that we want full time residents, families, to take part in the fabric of our town. The growing concern over second homes that are left vacant is a real concern for the community and it's estimated that 33% of homes in our town or second homes. Since 2019, our full-time residents numbered close to 6k--we have sustained a 4.07% year over year decline in full time residents resting at just under 5k in 2024. We need to act. The need to incentivize and encourage the values we support is vitally important. To that end a parcel tax that is fully refunded to owners who can provide annual proof of residency, or a signed lease, within the city limits would achieve these objectives. Some advantages of this approach compared to a vacancy tax are 5-fold:
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Authority: California cities, counties, and special districts have the authority to impose parcel taxes, but these taxes generally require a two-thirds voter approval under Proposition 13.
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Uniformity: Parcel taxes must be uniform, meaning they apply equally to all parcels within the taxing jurisdiction. However, they can vary by use or size of the parcel.
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Refund Mechanism: The concept of providing a refund or rebate to property owners who prove permanent residency is innovative. It could be structured as an exemption or rebate program rather than a direct refund. This would need to be clearly defined in the tax measure and would require voter approval.
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Legal Challenges: Any such tax measure could face legal challenges, particularly regarding the uniformity requirement and potential equal protection issues. Therefore, it is crucial to have the measure thoroughly vetted by legal counsel specializing in municipal tax law.
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Precedents: Some California cities have implemented vacancy taxes targeting vacant residential or commercial properties, with exemptions for those who can demonstrate specific uses or occupancy. These precedents suggest that a similar approach might be feasible for a parcel tax with a refund mechanism tied to residency.
While the particulars of how much to tax, what we would consider "vacant" (150 days? 30 days?) and exemptions would need to be thoughtfully approached, this could be a viable tool in our arsenal to shape the change occurring in Saint Helena. While this initiative would be more focused on creating an environment where second homeowners would either choose to rent or hopefully live in St. Helena, the revenue considerations could be significant based on 33% of 3836 city parcels. For example, a $1000 dollar vacancy parcel tax could generate up to 1.2 million in additional revenue. More to come.
*Many have brought up outsourcing of our Police department to Napa County. This has been studied multiple times in the past and proven to not be cost effective. I am not proposing we redo this analysis.