Voters in the City of Orange are slated to decide whether or not to increase the city’s sales tax in an effort to keep the municipal budget afloat.
On Friday, city council members narrowly voted 5-2 to put a 0.5% sales tax measure on the November ballot that – if approved by voters – would sunset in 10 years and generate $20 million annually.
The vote comes after Orange City Council members earlier this week struggled to reach a consensus on a sales tax measure with Councilmembers Kathy Tavoularis, Jon Dumitru, and John Gyllenhammer opposing every attempt to put such a measure on the November ballot Tuesday.
[Read: How’s Orange Going to Patch its Multi-Million Dollar Budget Gap?]
Mayor Dan Slater told his colleagues Friday that it’s time to make a final decision after officials struggled to act on a sales tax measure in the face of a multi-million deficit on Tuesday.
“We’re here today to make an important decision that could set the course for our city’s future. This analysis paralysis is frustrating and the turmoil this is causing our citizens and our hundreds of employees and their families is painful and completely unnecessary,” Slater said Friday.
Gyllenhammer and Dumitru were the dissenting votes. Tavoularis, who was against the sales tax measure on Tuesday, changed her vote Friday afternoon.
“Our deficit is down to eight – eight and a half – million so we’ve done some adjustments to reduce the deficit. We’re getting much closer, we have a number of things in from a revenue perspective that are promising to add some additional reduction in that deficit,” Gyllenhammer said.
Councilwoman Arianna Barrios criticized Gyllenhammer’s comments and said officials should consider cutting council member’s stipends and benefits – something residents called out in public comments.
Councilwoman Ana Gutierrez called on her colleagues to cut their stipends and benefits – a discussion which is expected to come back at the next council meeting.
Barrios also said that a quarter of their revenue comes from gas sales in a state that is looking to switch to EV vehicles.
“If gas sales dropped into the toilet, we would not be talking about a sales tax, we’d be talking about straight up municipal bankruptcy. Plain and simple. We haven’t even addressed that,” Barrios said.
She said a half-cent sales tax increase won’t fix their budget woes.
“If we go half cent, I worry that not only will we be right back where we were before, we won’t have the reserves to cover even that.”
Her efforts to put a 1% sales tax measure on the ballot that would lower to 0.5% in 10 years and end in 20 years, generating $40 million annually in the first decade, failed.
Dumitru echoed Barrios remarks and said he would only support a 0.75% or 1% measure.
“At half percent you’ll have an ongoing deficit in four years,” he said.
Councilman Dennis Bilodeau refused to support anything more than a 0.5% sales tax measure.
“I don’t want to give this city $40 million dollars, I’m afraid of what it’ll do with it,” he said.
Sounding Off on a Sales Tax
A host of residents, including local firefighters and their families, urged city officials to let residents vote on a sales tax measure to maintain public safety services.
“People sit up here week after week saying that they love the city so much, and they love police and fire so much and they love our senior citizens so much but then take away any way of funding them,” said Reggie Mundekis, a local resident and longtime watchdog.
“I want to vote on the sales tax measure.”
Orange County District Attorney Todd Spitzer showed up to Friday’s meeting to criticize the sales tax measure and told officials to address the deficit by making cuts – but not to police and fire.
“Your first and only priority is public safety, it’s police and fire. All the other accoutrements of the city, which I love, just like you do, should go by the wayside until you get your financial house in order. You have to make the cuts,” Spitzer said.
“You do not raise taxes, or you will be following the direction of the rest of the State of California.”
Car dealership owners have also criticized the tax increase, arguing that it will impact car sales.
Sarah Catalan, executive director of the OC Taxpayer Association, said sales tax increases hurt most the people who can afford it the least.
“There are a lot of families who can’t afford to be here tonight to voice their concerns who absolutely cannot afford this tax increase,” she said.
Grappling With a $19 Million Deficit
So far, city officials shaved off about $9.5 million off the deficit by adding $4.5 in revenue by increasing fees and upping parking enforcement citations on residents – a move that is expected to generate up to $10 million over five years.
Officials have also made $5 million in spending cuts through hiring freezes, eliminating the crossing guard program, eliminating maintenance and clean up along Santiago Creek and reducing public library operations, according to a staff report.
On top of that, officials earlier this week also voted to cut all publicly hosted community events to save money, but representatives from Wilson Automotive told the city they would cover concerts in the park.
The council majority voted to rescind the cut to the public events on the condition that Wilson Automotive gives them a check by Wednesday to keep the concerts going.
Barrios abstained from the vote and raised concerns about the donation.
“I have a really hard time with this particular donation after we had the same group eviscerating members of our council for the last three weeks,” she said.
In an effort to bring in more revenue, city council members floated the idea of implementing an over-enrollment penalty on Chapman University, as well as a fee charged for use of police and fire services on campus.
Dumitru has also suggested the city looking at contracting with the county to run their libraries and having a policy discussion on tax sharing to entice Hollywood filmmakers to produce movies in the city.
Orange isn’t the only city in OC where elected officials are trying to bring in new revenue streams to address dismal financial outlooks.
Cities like Fullerton and Santa Ana are also looking towards creating new taxes or increasing old ones to help address budget shortfalls.
[Read: New Taxes? Increasing Revenue in Orange County Amid Budget Shortfalls]
Hosam Elattar is a Voice of OC reporter and corps member with Report for America, a GroundTruth initiative. Contact him at helattar@voiceofoc.org or on Twitter @ElattarHosam.
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