Fortuna eyes sales tax hike as $1.8 million budget gap deepens

A $1.8 million hole in Fortuna’s budget could force harder choices on police staffing, city services and basic operations if voters do not back a sales tax hike. City leaders are already weighing a 0.75 percent local tax measure that would generate about the same amount the city says it has lost in purchasing power over the last six years.

The numbers behind the squeeze are stark. Fortuna is taking in about $500,000 less each year from sales tax and hotel tax than it did in 2020, while annual liability insurance costs have climbed by roughly $500,000 over the same period. City manager Amy Nilsen said the decline reflects more than one factor, pointing to the collapse of the cannabis industry, a difficult national economy and expensive gasoline in a city with a smaller tax base.

The pressure has already reached staffing. Fortuna imposed a hiring freeze on general-fund positions in November 2025, leaving openings unfilled at the River Lodge Conference Center and in the police department until the council made exceptions in March for a community development director and a public safety dispatcher. Nilsen said more cuts are coming and that the April 27 council meeting will include budget and service-reduction discussions.

On April 7, the Fortuna City Council unanimously voted to place a 0.75 percent sales tax measure on the November 2026 ballot. If approved, the tax would add revenue the city says could help cover basic operations and restore some flexibility, but it would also test whether a local tax fix can close the gap or only buy time before the next shortfall.

Public opinion already looks divided. A survey of 200 residents conducted for the city found that 64 percent believed Fortuna needed more money, but 57 percent generally opposed tax increases. In that same survey, 46 percent supported the proposed sales tax and 51 percent opposed it, with a 7 percent margin of error. The city’s last attempt at a similar tax, Measure P in November 2024, failed 58.33 percent to 41.67 percent.

Fortuna already has a 0.75 percent transaction and use tax, first adopted as Measure E in 2016 and extended in 2020 through March 31, 2033. The California Department of Tax and Fee Administration lists Fortuna’s combined sales and use tax rate at 9.50 percent as of April 1, 2026. Nearby cities and the county have also turned to voters for more revenue, with Arcata approving Measure H in 2024 and Humboldt County approving Measure O by 63.41 percent, underscoring how much of the fiscal pressure in Humboldt County is now landing at the ballot box.