Napa County is rapidly approaching a financial crisis, as its ability to fund new priorities is quickly eroding. Within the next five years, the county’s once-reliable financial cushion is expected to shrink drastically, from $36 million to just $6 million. The dramatic decline in available funds leaves little room for anything beyond essential services, such as fire protection and public safety, which are among the county’s most pressing financial obligations.
At the core of the issue is Napa’s general fund, which supports core services such as public health, law enforcement, and fire protection. The fund, which currently stands at $324 million, had a balance of $36 million in unassigned funds at the end of the 2023-24 fiscal year. However, projections show that the balance will plummet to just $30 million by 2025-26 and continue to fall to a mere $6 million by 2029-30. This alarming trend comes despite rising revenues, signaling that the county’s financial cushion is quickly disappearing.
The primary factors driving the county’s financial troubles are escalating costs in fire protection, capital improvements, and insurance. According to Daniel Sanchez, senior management analyst for Napa County, the county is already making significant transfers from its general fund to cover growing expenses. This includes an $18 million transfer to the fire fund and another $18 million to the capital improvement fund, with no relief in sight.
Fire Protection Costs Continue to Soar
Fire protection is one of the county’s most pressing financial concerns. Napa’s fire fund receives $15 million annually from property taxes, but this amount is no longer sufficient to cover rising costs. The county has had to subsidize the fire fund with general fund transfers to make up for the shortfall. Expenses have surged due to increased vegetation management, a more expensive Cal Fire contract, and growing capital needs for the Napa County Fire Department.
In an attempt to address these challenges, the county proposed Measure L in 2022, a quarter-cent sales tax intended to raise $10 million annually for fire services. However, the measure failed to garner the necessary two-thirds majority for approval, leaving officials to reconsider their options. Napa County Executive Officer Ryan Alsop acknowledged that the current funding model is unsustainable and stressed the need for a new solution.
County supervisors, including Belia Ramos and Joelle Gallagher, are now calling for a serious discussion about creating a fire district with the ability to levy a parcel tax, shifting the financial burden away from the general fund. Supervisor Gallagher emphasized the urgency of the situation, stating, “We need to raise the revenue for fire prevention and mitigation, and cannot continue to do what we’re doing.”
Capital Improvements and Insurance Costs Add to the Strain
Beyond fire protection, Napa County faces additional financial pressures from capital improvement projects and skyrocketing insurance costs. The county has committed to a $140 million project to relocate county offices to a south campus, which will require a $10 million annual transfer to the capital improvement fund. On top of this, the county will need an additional $9 million annually to cover bond financing.
Meanwhile, insurance premiums have more than doubled in recent years, with the county’s liability and property coverage costs expected to reach $20 million annually by 2027. The increase is attributed to climate change, natural disasters, and market volatility, factors that are expected to continue driving up costs in the future.
“The slope of the line is getting steeper and steeper, and it’s not going to come down any time soon,” Sanchez said, referring to the rapid increase in insurance costs. He also pointed to recent events, such as the January fires in Los Angeles, as contributing to the trend.
Uncertainty Over Future Revenue Streams
Adding to the county’s financial uncertainty is the potential loss of millions in revenue from a complicated source: state payments made in lieu of Vehicle License Fee property tax payments. The Napa Valley School District’s potential shift to a “basic aid” district due to declining enrollment could result in significant changes to this revenue stream, though the exact impacts are still unclear. According to Sanchez, the earliest this change could occur is in the 2026-27 fiscal year, but the loss could be substantial.
The combination of rising costs, shrinking reserves, and uncertain future revenue sources has left Napa County leaders grappling with difficult decisions about how to balance the budget while maintaining essential services. Without intervention, the county’s financial outlook remains bleak, and county officials are now looking for long-term solutions to stabilize their finances and protect vital services for the community.
As the clock ticks down and Napa County’s financial cushion continues to dwindle, the county’s leadership faces an increasingly urgent challenge to find sustainable funding solutions before it is too late.