Voters in a host of Orange County cities will decide at the ballot box in November if they want to raise the taxes they pay to dig out their cities from deficits that are millions of dollars deep.
It comes as city officials this summer warn of a poor fiscal outlook – one that is threatening to decimate public services like police and fire, city events and local libraries – as spending on things like public safety outpaces revenues.
[Read: New Taxes? Increasing Revenue in Orange County Amid Budget Shortfalls]
Samuel Stone, a professor of public administration at Cal State University, Fullerton, said the need to generate more revenue is not just an OC problem but a statewide problem.
“Cities are kind of running short on levers to pull in terms of what kinds of development to allow, what they can allow given how voters feel about things. And so if they don’t have that lever to pull, the other lever is we raise tax rates on the things that will generate us increased revenue on the development that’s already here,” Stone said.
He points to California Prop. 13 – 1978 initiative that puts limits on property tax and requires an election to raise taxes or introduce new ones at the local level – as a barrier for local governments to generate revenue.
“Every city is different and has their own situation that they’re dealing with. The commonality is that they all operate under state laws. Especially including Prop. 13,” he said.
Last week, La Habra and San Clemente officials became some of the latest in OC to put a sales tax measure on the ballot.
On Aug. 5, La Habra officials voted unanimously to put a 1% sales tax measure on the November ballot after cutting and deferring over $6 million to balance the current fiscal year budget.
[Read: La Habra Voters to Decide on Sales Tax Increase in November]
Officials approved the measure after their contract with the Los Angeles County Fire Department shot up by over $3 million.
On Aug. 6, San Clemente officials voted 4-1 to put their own sales tax measure on the ballot as they struggle to replenish sand on their beaches.
Jodi Balma, a political science professor at Fullerton College, said many cities are likely bringing up sales tax measures due to no longer seeing Covid-relief funds and lost revenue from e-commerce being seen throughout the state.
“I don’t think consumers are particularly scared of sales tax increases, but for voters, it becomes a big issue,” she said in a Friday phone interview.
She added that whether or not OC voters approve of a tax hike depends on how elected officials address the realities of their city budgets, which may cause voters to turnout if cuts to essential services are in play.
“It’s important for voters to understand that city council members who ask for sales tax increase are being fiscally responsible,” Balma continued. “They are asking the voters to solve a fiscal problem that may not be a solution that voters want.”
Balma also said that sales tax measures passing are dependent on how questions are presented on the ballot. If there are various ballot measures related to increasing funds for infrastructure, schools or other city services, then voters might be hesitant on approving a sales tax hike.
Sales Tax Measures on The November Ballot in OC
Local officials are placing tax measures on the November ballot months after voters in Westminster approved a 0.5% sales tax increase in March to help fund emergency services, maintain public places like parks and prevent future cuts to the police and fire department.
Now a host of voters across OC in places like Orange, Buena Park and Seal Beach will decide if they want to pay more in sales taxes too.
Facing what started off to be a projected $19 million budget deficit, Orange city officials this summer struggled to make hard choices on what public service cuts to make and whether to ask voters to decide on a sales tax measure to help bail them out of their poor financial outlook.
At the end of June, Orange City Council members narrowly voted at a special meeting 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.
[Read: Orange Asks Voters to Raise Taxes To Bail Out City Budget]
The vote came after pushback from local car dealership owners, the OC Taxpayer Association and District Attorney Todd Spitzer who argued the city should focus on making cuts to spending instead of looking at asking voters to raise taxes.
Sara Catalan, executive director of the OC Taxpayer Association, said at the June 28 meeting that tax increases have permanent consequences even if they sunset.
“The city has spent more than it has taken in for quite some time and now we’re in a situation where we have to right that ship so I would just ask you to consider not only what you’re funding, but how you’re funding it and who is paying that bill,” she said.
Catalan did not respond to a request for comment Aug. 5 on tax increase measures.
Meanwhile, some residents and leaders with public safety unions called on the council to put the tax measure on the ballot and allow voters to decide if they want to spend more on taxes to protect public safety spending in the city from getting cut.
If the measure is approved, the sales tax rate in Orange will increase from 7.75% to 8.25%.
Last month, Buena Park city leaders decided on asking voters for a 1% sales tax increase following concerns of potential cuts to essential services.
This came after a report from a consulting firm – hired by the city manager’s office – said that Buena Park Police Department is severely understaffed and recommended hiring 15 sworn officers, which would cost taxpayers nearly $6 million.
Council members unanimously supported the ballot measure in late July, all of which emphasized the need for more policing and ensuring Buena Park can generate revenue long term.
If approved, the sales tax would increase to 8.75% – the second highest rate in the county – and would bring in roughly $20 million in funds annually.
[Read: Buena Park Leaders Put Sales Tax Hike on November Ballot]
In Seal Beach, council members are looking towards voters to patch up a $6 million budget deficit with their own 1% sales tax hike proposal.
This would put the city’s sales tax at 9.25% – tied for the highest in Orange County.
It comes as Seal Beach City Council grapples with making severe cuts to many essential services, including police and fire, street repairs, parks, senior services and other delays toward city infrastructure.
Made up of a conservative majority, all council members supported raising taxes despite voters approving of another 1% sales tax increase back in 2018.
But if approved by voters, the increase would generate about $3 million, only half of the city’s current deficit, according to a city staff report.
[Read: Seal Beach Voters to Decide on Sales Tax Increase to Curb $6 Million Deficit]
Meanwhile down south in another coastal OC city, officials are grappling with replenishing the sand on San Clemente’s beaches.
To help fund those efforts, elected officials asked voters to consider a 0.5% sales tax increase in November that is estimated to generate about $7 million annually.
[Read: San Clemente Needs More Money For Sand]
If the proposal is approved by voters, it would bump the current 7.75% sales tax rate to 8.25% in San Clemente. The funds would be reserved for sand replenishment efforts only.
Angelina Hicks contributed to the reporting in this article.
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.
Hugo Rios is a Voice of OC reporting fellow. Contact him at hugo.toni.rios@gmail.com or on Twitter @hugoriosss.
Gigi Gradillas is a Voice of OC Tracy Wood Reporting Fellow. Contact her at gigi.gradillas@gmail.com or on Twitter @gigigradillas.
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