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Receive a presentation from the Department of Resource Management on placing a potential revenue measure on the November 2026 General Election ballot to modernize and expand Solano County’s commercial energy production and resource extraction business license tax structure; Direct staff to return to the Board on June 23, 2026, to initiate the ballot process; Direct staff to prepare the necessary resolution for amendments to Solano County Code Chapter 11, Article XII
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Published Notice Required? Yes ___ No __X__
Public Hearing Required? Yes ___ No __X__
RECOMMENDATION:
The Department of Resource Management recommends the Board of Supervisors:
1. Receive a presentation from the Department of Resource Management on placing a potential revenue measure on the November 2026 General Election ballot to modernize and expand Solano County’s commercial energy production and resource extraction business license tax structure;
2. Direct staff to return to the Board on June 23, 2026, with a proposed resolution in support of placing a measure on the November 2026 General Election ballot to amend the County’s commercial energy production and resource extraction business license taxes; and
3. Direct staff to prepare the necessary amendments to Solano County Code Chapter 11, Article XII.
SUMMARY:
The Department of Resource Management seeks Board direction regarding placement of a general tax measure on the November 3, 2026, General Election ballot intended to modernize and expand Solano County’s existing business license tax structure applicable to commercial energy production and resource extraction activities operating in the unincorporated county.
Solano County established its existing commercial wind turbine business license tax in 1994 pursuant to Revenue and Taxation Code section 7284. The current rate of $0.00003 per kilowatt-hour has remained unchanged for more than thirty years and does not contain an inflation adjustment mechanism. As a result, the real value of revenue generated by tax has substantially declined over time due to inflation.
A proposed business license tax update would:
• Restore the inflation-adjusted value of the existing wind energy tax
• Expand the tax structure to additional large-scale commercial energy industries
• Establish consistent treatment across commercial energy generation technologies
• Provide ongoing inflation adjustment mechanisms to preserve long-term revenue value
• Generate additional General Fund revenues to support general governmental services
The proposed measure would be structured as a general tax pursuant to Article XIII C of the California Constitution (Proposition 218) and would require approval by a simple majority of countywide voters, with all revenues deposited into the County General Fund.
FISCAL IMPACT:
The costs associated with preparing this agenda item are nominal and included in the Department’s FY2025/26 Working Budget. If directed to proceed, staff will return with estimated election and public outreach costs associated with placement of the measure on the November 2026 ballot. The estimated cost for a countywide ballot measure is approximately $138,651.
Estimated annual revenues generated by the proposed measure are provided in Attachment B.
DISCUSSION:
Existing Wind Turbine Tax
Solano County established a business license tax on commercial wind turbine generators in 1994 pursuant to Revenue and Taxation Code Section 7284. The tax applies to commercial wind energy facilities operating in the unincorporated county. The current tax rate of three one-thousandths of one cent ($0.00003) per kilowatt-hour generated has remained unchanged since adoption and does not include any inflation adjustment provision.
Currently, approximately 421 of 524 wind turbines located within the unincorporated county are subject to the tax. Certain publicly owned facilities operated by the Sacramento Municipal Utility District (SMUD) are exempt under State law. In FY2024/25, the tax generated approximately $56,496 in annual revenue. Based on Consumer Price Index inflation, the equivalent inflation-adjusted value of the tax would be approximately $124,648 annually. A breakdown of the tax collected can be found in Attachment C.
Proposed Business License Tax Amendments
The proposed amendments would modernize and expand the County’s commercial energy business license tax structure through four primary components.
(1) Wind Turbine & Commercial Solar - Rate Increase & New Tax
• Increases the existing wind turbine tax rate from $0.00003 to $0.00007 per kilowatt-hour generated
• Expands in applicability to commercial solar energy systems producing electricity for resale or off-site use
The proposed rate is approximately equivalent to the inflation-adjusted value of the original 1994 tax rate. Commercial solar systems are proposed for inclusion to establish consistent treatment across large-scale commercial electricity generation technologies and avoid inequities associated with future utility-scale solar development. Estimated annual revenue from wind and solar operations at the proposed rate totals approximately $131,825.
(2) Natural Gas Well Extraction - New Tax
Taxing natural gas extraction companies would promote greater consistency under the County’s business license tax by treating natural gas extraction similarly to wind turbines and commercial solar operations, each of which derives commercial value from locally available natural resources.
• Establishes new tax at $0.25 per thousand cubic feet (McF) of natural gas extracted (63 active gas wells in the county extracted 602,037 McF in 2025)
The 2025 average California Industrial Price for natural gas was $13.06 per McF (Aprox. $7,862,603 total). There is the potential for an additional 109 idle wells to be taxed, if reactivated.
Estimated annual revenues based on current production total approximately $150,509.
(3) Battery Energy Storage Systems (BESS) - New Tax
• Establishes new tax at $1.00 per megawatt-hour (MWh) of approved electrical capacity per month
The proposed tax is capacity-based (flat charge on nameplate capacity), not usage-based, regardless of actual charge/discharge cycles. Estimated annual revenue from the currently proposed Corby BESS facility at Kilkenny Road and Byrnes Road would total approximately $14,400 a year.
(4) Biennial CPI Adjustment - All Categories
The proposed amendments would establish automatic biennial CPI-U adjustments beginning January 1, 2028. The Director of Resource Management would calculate and publish adjusted rates based upon the Consumer Price Index for All Urban Consumers (CPI-U), U.S. City Average, as published by the United States Bureau of Labor Statistics.
The purpose of the adjustment mechanism is to:
• preserve the long-term value of voter-approved revenues
• reduce the need for future ballot measures solely for inflationary adjustments
• maintain consistency with other local government revenue mechanisms that utilize CPI indexing
Legal Framework and Ballot Requirements
The proposed measure would be structured as a general tax pursuant to Article XIII C of the California Constitution (Proposition 218). As a general tax, revenues must be deposited into the County General Fund, be used for any lawful governmental purpose, and approval requires a simple majority vote of countywide voters. The measure would apply to facilities located within the unincorporated area of Solano County.
To qualify for the November 3, 2026 General Election ballot, the Board must approve ballot placement no later than August 4, 2026. The measure would be voted on by all registered Solano County voters who reside within cities and in the unincorporated areas. Staff recommends the proposed structure as a general business license tax authorized under Revenue and Taxation Code Section 7284 which represents the most administratively straightforward framework currently available.
Public Outreach
If directed to proceed, staff will prepare informational materials regarding the proposed measure and election process. All materials and communications prepared using County resources would be reviewed by County Counsel to ensure compliance with applicable laws prohibiting the use of public resources for campaign advocacy. The County’s communications would be limited to factual and informational content and would not advocate for approval or rejection of the measure.
Environmental Review
The proposed ordinance amendments are exempt from the California Environmental Quality Act (Public Resources Code §21000, et seq.) (CEQA) pursuant to CEQA Guidelines (Cal. Code Regs., tit. 14, §15000 et seq.) Section 15378(b)4 and Section 15061(b)(3) (Common Sense Exemption).
ALTERNATIVES:
Alternative 1 - Inflation Adjustment Focused Measure
The Board could direct staff to return with a more limited ballot measure focused solely on adjusting the existing commercial wind turbine tax rate to reflect inflation, without expanding the business license tax structure to additional energy-related industries or implementing ongoing CPI indexing. This approach would reduce the scope of the proposed measure while still modernizing the existing wind turbine tax established in 1994.
Alternative 2 - Expanded Commercial Energy Measure
The Board could direct staff to further evaluate whether portions of the proposed tax structure should be separated into multiple ballot measures, such as distinguishing between commercial renewable energy facilities and natural gas extraction activities. This approach could provide additional flexibility regarding future stakeholder outreach, ballot structure, and election strategy considerations.
Alternative 3 - No Further Direction
The Board could decline to provide further direction regarding preparation of a ballot measure. Under this alternative, the County would retain the current business license tax structure without inflationary adjustment or expansion to additional commercial energy production or resource extraction activities.
OTHER AGENCY INVOLVEMENT:
The Department coordinated with County Counsel in the development of this item. County Counsel review of the final resolution, ballot materials, and related election documents would occur prior to final Board consideration and ballot placement.
CAO RECOMMENDATION:
APPROVE DEPARTMENTAL RECOMMENDATION