On February 10, 2026, the Board formed the Revenue Generation Ad Hoc Subcommittee to coordinate with staff to advise the Board of Supervisors on potential discretionary revenue generation mechanisms. Since that time the subcommittee has met several times. The initial work of the subcommittee has been to review revenue generation options and identify near and longer-term actions. In the near-term several focus areas have been identified.

First, is continued advocacy to secure a legislative fix to the disproportionate County ERAF (Educational Revenue Augmentation Fund) shift. If successful, this effort will result in net positive revenue to the County of approximately $3m annually. County staff understands that Senator Cabaldon has submitted a budget policy request to effectuate this correction.

Second, is a potential increase in the transient occupancy tax (TOT) rate in unincorporated Yolo County. Transient occupancy tax is a tax on lodging night stays of a 30-day duration or less. The current rate in Yolo County is 8% which lags our city and regional peers. The Subcommittee recommends placing a ballot measure on November 2026 ballot to increase the rate to 12%. This increase would generate an estimated $250,000 in General Fund revenue annually. Att. A includes an overview of TOT rates and the timeline for a potential November ballot measure with the June 23 Board meeting being the last meeting for action before the ballot deadline. Att. B includes a list of current lodgings remitting TOT within the unincorporated area.

Finally, third, is a review of restricted and unrestricted fund balances across special funds to determine if funds could be used to assist in addressing the County’s structural General Fund deficit. Staff anticipates returning later in the year with a list of fund balances along with identifying which funds the Board may wish to focus their policy discussion relative to potential use in navigating the current budgetary headwinds.

Longer term efforts include a potential sales tax increase. Yolo County’s cumulative sales tax is currently 7.25%, the statutory minimum with no additional tax locally imposed. State statute limits the combined rate of all local sales taxes to 2% unless specifically authorized by statute. Since the Cities of Davis and West Sacramento already levy their own 2% sales tax, a Yolo County measure can only apply to the unincorporated area unless special legislation authorizing a higher cap is approved; raising the cap would likely require coordination with city stakeholders. A 1% sales tax increase in the unincorporated area would generate approximately $6m annually and a 1% increase countywide would generate $40m-$50m annually. Staff will work with the subcommittee on a conceptual timeline for a potential increase.

Other longer-term revenue generation opportunities include a review of Juvenile Hall utilization with the possibility of expanding Secure Track capacity to allow for counties to place sentenced youths at the Yolo County Juvenile Hall. CAO and Probation staff are in the preliminary stages of analysis and will coordinate this initial review with the subcommittee.

Staff is seeking Board feedback, particularly in regard to a potential TOT increase. If there is interest from the Board, staff will work to bring back the necessary amendment to the current TOT ordinance at the May 26, 2026 Board meeting.