ARTICLE
As I wrote in a previous eNews report a couple of weeks ago, the ad-hoc committee of the Santa Cruz City Council was reviewing the city’s economic climate and was in the process of making recommendations to the full city council to place a sales tax measure on an off-year 2021 election ballot. At Tuesday’s City Council meeting that recommendation was turned upside down by one city council member’s refusal to vote in support of the recommendation. The sole No vote by Councilmember Sandy Brown killed the deal. The issue at hand was declaring a fiscal emergency which requires all council members voting in the affirmative to recommend a sales tax ballot measure to move forward and let the voters decide. Item # 43 Resolutions Requesting the Placement of a Sales and Use Tax Ballot Measure on the November 2021 Special Municipal Election, or Aligned with State of California’s Gubernatorial Recall Election (CN) Foremost, the Santa Cruz County Chamber has not taken a formal position “for or against'' the ballot measure. In conversations with the city leaders early this month, I listened to the reasons for the ad-hoc committee’s recommendation. There is no denying it, 2020 was a dreadful year for local governments as they faced unforeseen financial losses caused by the pandemic and the statewide shelter in place order. The magnitude of the economic impact will take several years to reach full recovery. Since March 2020, cities across California were determined to find innovative ways toward economic recovery. The City of Santa Cruz managed to restructure debt in mid-year 2020 with reductions in city services, furloughs to city staff, hiring freezes and other expense reductions to address the severe health, economic and wildfire crisis that plagued our community. The economic impact to the city during the pandemic was tagged at $21 million. Item #43 on the June 22 Santa Cruz City Council Agenda was a very detailed and thorough review and analysis of the proposed sales and use tax. The packet includes the resolution language, a report of basic municipal revenue sources, and local revenue measures results from the 2020 November election cycle. A Tax Measure Fact sheet, Frequently Asked Questions (FAQ), and the Resolution of Emergency Findings. It should be noted that there were over 400 revenue-related measures on local ballots in California for the November 3, 2020, election including 260 local tax and bond measures. Over half of these measures (146) were proposed by or for cities. There were also 16 county, 25 special district, and 73 school tax or bond measures. In prior elections, typically about one-third of measures were majority vote general taxes, one-third were special taxes, and one-third 55 percent school bonds. In the 2020 election there was a notably higher proportion of majority vote general tax measures and most passed (76%). These included a record 71 measures to increase local sales taxes, 20 transit occupancy tax increases and 26 taxes on cannabis. There were five city, county and special district general obligation bond measures seeking a total of $1.9 billion in facility improvements for affordable housing, community pool improvements, a hospital, and fire stations. There were 30 city, county and special district parcel taxes, including 20 for fire /emergency medical response. Over the course of the past several years, Santa Cruz County cities and the County have used sales tax increases, school bonds measures, Transit Occupancy Tax (ToT), and a host of revenue enhancement programs to augment City and County budgets. If passed, the city’s sales and use tax rate would increase from 9.25% to 9.75%. Currently, sales tax rates around the region vary between 9% and 9.75%, with rates in Capitola at 9%, Watsonville at 9.25%, Scotts Valley at 9.75% and unincorporated portions of Santa Cruz at 9%. The City utilized the services of a consultant, Gene Bregman & Associates, to determine the pulse of likely voters for a sales tax measure. The poll interviewed over 400 likely voters online, and by cell and landline phone during the period April 28 to May 2, 2021. According to the consultant’s analysis, “One of the positive results of the survey is that perceptions of the City’s need for more money have increased since our last poll, in 2019. Currently, 73 percent said the City had at least some need for more money, including 39 percent who felt there was a ‘great need.’ Both of these proportions are statistically significant increases from 2019. Further, although the overall job rating for Santa Cruz City government has not changed in the past two years, 75 percent of the voters felt that the City has done an ‘excellent’ or ‘good’ job in its response to Covid-19.” You can see the full results of the poll here: Gene Bregman & Associates Poll 2021. The consultant did make a qualifying caveat: he believed the City of Santa Cruz is in a “good” position to pass a general half-cent sales tax increase in the fall of 2021, whether or not the election coincides with a gubernatorial recall election. The bigger caveat is whether there will be organized opposition within the community. The critical component of any sales tax measure is to ensure to the voters that, if the measure receives voters’ approval, the funds are directed to the City’s needs and services. How would a local funding measure help protect and maintain essential city services? According to the City staff report, funding from a potential measure could help the City: > Partner with nonprofits and the County to connect the homeless to mental health and substance abuse and addiction services and expand crisis response services; > Invest in affordable housing for low- and moderate-income households; > Support reliable services for the homeless, such as hygiene, storage and safe sleeping locations; > Reduce the risk of wildfires in our open space and natural areas; > Help address the impacts of climate change by improving carbon neutrality, energy efficiency, renewable energy usage, and creating green jobs; > Improve safety by maintaining streets, roads, sidewalks and other public facilities; > Update and modernize firefighting and emergency medical services and equipment; > Restore services to properly maintain and reopen our parks and recreational facilities. Critical to the business community, how would the funds from the measure help local businesses? Again according to the City Staff report, The City has a variety of programs in place to help local businesses recover financially, including: > Fee deferrals and reductions for business-related taxes and fees, including business license taxes, parking fees and permits, helping reduce overhead during a time of decreased revenue; > Incentives and permit streamlining to create and maintain outdoor dining; > The Shop Local Campaign in collaboration with the Downtown Association of Santa Cruz; > The Vacant Storefront Activation Pilot Program (Downtown Pops!), which subsidizes rent to help new businesses occupy empty storefronts and support existing downtown businesses. On Monday before the City Council meeting, City Manager Martin Bernal said during a Monday call with members of the local media “It puts us in a position to be proactive. The tax increase is expected to bring the city an additional $6 million annually.” Unfortunately, the work by the city staff, the ad-hoc council committee over the past several months and the opinions of over 400 likely voters who were interviewed did not persuade one council member to join her six colleagues with an affirmative vote. I watched the entire city council meeting and was disappointed in the outcome — regardless of whether the council should increase our sales tax — but rather that one council member would deny the voters of Santa Cruz County to make that decision.
As I wrote in a previous eNews report a couple of weeks ago, the ad-hoc committee of the Santa Cruz City Council was reviewing the city’s economic climate and was in the process of making recommendations to the full city council to place a sales tax measure on an off-year 2021 election ballot. At Tuesday’s City Council meeting that recommendation was turned upside down by one city council member’s refusal to vote in support of the recommendation. The sole No vote by Councilmember Sandy Brown killed the deal. The issue at hand was declaring a fiscal emergency which requires all council members voting in the affirmative to recommend a sales tax ballot measure to move forward and let the voters decide.
Item # 43 Resolutions Requesting the Placement of a Sales and Use Tax Ballot Measure on the November 2021 Special Municipal Election, or Aligned with State of California’s Gubernatorial Recall Election (CN)
Foremost, the Santa Cruz County Chamber has not taken a formal position “for or against'' the ballot measure. In conversations with the city leaders early this month, I listened to the reasons for the ad-hoc committee’s recommendation. There is no denying it, 2020 was a dreadful year for local governments as they faced unforeseen financial losses caused by the pandemic and the statewide shelter in place order. The magnitude of the economic impact will take several years to reach full recovery. Since March 2020, cities across California were determined to find innovative ways toward economic recovery. The City of Santa Cruz managed to restructure debt in mid-year 2020 with reductions in city services, furloughs to city staff, hiring freezes and other expense reductions to address the severe health, economic and wildfire crisis that plagued our community. The economic impact to the city during the pandemic was tagged at $21 million.
Item #43 on the June 22 Santa Cruz City Council Agenda was a very detailed and thorough review and analysis of the proposed sales and use tax. The packet includes the resolution language, a report of basic municipal revenue sources, and local revenue measures results from the 2020 November election cycle. A Tax Measure Fact sheet, Frequently Asked Questions (FAQ), and the Resolution of Emergency Findings.
It should be noted that there were over 400 revenue-related measures on local ballots in California for the November 3, 2020, election including 260 local tax and bond measures. Over half of these measures (146) were proposed by or for cities. There were also 16 county, 25 special district, and 73 school tax or bond measures. In prior elections, typically about one-third of measures were majority vote general taxes, one-third were special taxes, and one-third 55 percent school bonds. In the 2020 election there was a notably higher proportion of majority vote general tax measures and most passed (76%). These included a record 71 measures to increase local sales taxes, 20 transit occupancy tax increases and 26 taxes on cannabis.
There were five city, county and special district general obligation bond measures seeking a total of $1.9 billion in facility improvements for affordable housing, community pool improvements, a hospital, and fire stations. There were 30 city, county and special district parcel taxes, including 20 for fire /emergency medical response.
Over the course of the past several years, Santa Cruz County cities and the County have used sales tax increases, school bonds measures, Transit Occupancy Tax (ToT), and a host of revenue enhancement programs to augment City and County budgets. If passed, the city’s sales and use tax rate would increase from 9.25% to 9.75%. Currently, sales tax rates around the region vary between 9% and 9.75%, with rates in Capitola at 9%, Watsonville at 9.25%, Scotts Valley at 9.75% and unincorporated portions of Santa Cruz at 9%.
The City utilized the services of a consultant, Gene Bregman & Associates, to determine the pulse of likely voters for a sales tax measure. The poll interviewed over 400 likely voters online, and by cell and landline phone during the period April 28 to May 2, 2021. According to the consultant’s analysis, “One of the positive results of the survey is that perceptions of the City’s need for more money have increased since our last poll, in 2019. Currently, 73 percent said the City had at least some need for more money, including 39 percent who felt there was a ‘great need.’ Both of these proportions are statistically significant increases from 2019. Further, although the overall job rating for Santa Cruz City government has not changed in the past two years, 75 percent of the voters felt that the City has done an ‘excellent’ or ‘good’ job in its response to Covid-19.” You can see the full results of the poll here: Gene Bregman & Associates Poll 2021.
The consultant did make a qualifying caveat: he believed the City of Santa Cruz is in a “good” position to pass a general half-cent sales tax increase in the fall of 2021, whether or not the election coincides with a gubernatorial recall election. The bigger caveat is whether there will be organized opposition within the community.
The critical component of any sales tax measure is to ensure to the voters that, if the measure receives voters’ approval, the funds are directed to the City’s needs and services. How would a local funding measure help protect and maintain essential city services?
According to the City staff report, funding from a potential measure could help the City:
> Partner with nonprofits and the County to connect the homeless to mental health and substance abuse and addiction services and expand crisis response services;
> Invest in affordable housing for low- and moderate-income households;
> Support reliable services for the homeless, such as hygiene, storage and safe sleeping locations;
> Reduce the risk of wildfires in our open space and natural areas;
> Help address the impacts of climate change by improving carbon neutrality, energy efficiency, renewable energy usage, and creating green jobs;
> Improve safety by maintaining streets, roads, sidewalks and other public facilities;
> Update and modernize firefighting and emergency medical services and equipment;
> Restore services to properly maintain and reopen our parks and recreational facilities.
Critical to the business community, how would the funds from the measure help local businesses? Again according to the City Staff report, The City has a variety of programs in place to help local businesses recover financially, including:
> Fee deferrals and reductions for business-related taxes and fees, including business license taxes, parking fees and permits, helping reduce overhead during a time of decreased revenue;
> Incentives and permit streamlining to create and maintain outdoor dining;
> The Shop Local Campaign in collaboration with the Downtown Association of Santa Cruz;
> The Vacant Storefront Activation Pilot Program (Downtown Pops!), which subsidizes rent to help new businesses occupy empty storefronts and support existing downtown businesses.
On Monday before the City Council meeting, City Manager Martin Bernal said during a Monday call with members of the local media “It puts us in a position to be proactive. The tax increase is expected to bring the city an additional $6 million annually.”
Unfortunately, the work by the city staff, the ad-hoc council committee over the past several months and the opinions of over 400 likely voters who were interviewed did not persuade one council member to join her six colleagues with an affirmative vote. I watched the entire city council meeting and was disappointed in the outcome — regardless of whether the council should increase our sales tax — but rather that one council member would deny the voters of Santa Cruz County to make that decision.