In recent years, Santa Ana leaders have been able to roll out a series of enhanced public services like road maintenance, graffiti removal, youth and homeless services.
Now officials are worried whether they can keep pace.
In another five years, $30 million in local sales go offline – part of a decrease in Measure X, the sales tax approved in 2018 that has financed all the recent program expansions.
City finance staff sent that message last week, putting up a video that got the attention of city council members who are now talking about whether they need to convene a group to study how to bring in more revenue to the city and protect shopping areas that bring in revenue.
That tax is expected to decrease to 1% in 2029 and then sunset all together in 2039.
According to the staff video, Measure X accounts for 22% of the general fund budget and once it decreases in 2029 the city will lose $30 million.
“The voters approved this tax, and then the city increased service levels and so if the tax is reduced, then the service levels will need to be reduced in kind, or we have to find some replacement revenue source for it,” the city’s finance Director Kathryn Downes told officials Tuesday.
“Backfilling 22% of our general fund revenue is a tall order.”
City Officials Worry About Expected Sales Tax Loss
City Council members are concerned about the projected loss of revenue.
City Councilman Phil Bacerra said the city needs to start looking at ways to generate revenue and increase police presence in areas of the city that do bring in tax dollars or else officials might ask for another sales tax increase.
“We need to do more to protect our revenue generating areas. Anaheim does that with the resort area. South Coast Plaza is protected by Costa Mesa and yet we don’t have that,” he said. “Our commercial court areas is where we need to protect. We need more officers. We need more resources dedicated there.”
Bacerra also said the city needs to do more to keep local hotels clean and safe to enhance hotel tax revenue.
Mayor Valerie Amezcua agreed with Bacerra that the city needs to generate revenue and prepare now.
“We can’t continue to build parks, if we can’t sustain them, if we can’t keep them safe, if we can’t keep our bathrooms open,” she said. “Tomorrow is going come very quickly.”
Councilman Johnathan Hernandez said that Santa Ana is home to world class professional fighters and if the city were to host UFC fights like in nearby Anaheim they could bring in money for the city.
“It’s important for us as we’re looking to fill these gaps, to really think outside of the box,” he said. “Hopefully, we can have some fights in our city, generate some revenue that will help us boost the hotel sales.”
Councilman Benjamin Vazquez said the city should make a revenue generating committee to come up with ways to bring money into the city.
Bracing For a Budget Gap
City staff and officials are calling on residents to take a survey and provide input on what city programs and services they should prioritize in the budget.
The survey is available online in English, Spanish and Vietnamese.
Meanwhile, Downes said at the Feb. 20 meeting that the city has refinanced their pension debt to help prepare for the expected revenue loss.
As far as what programs might get cut due to the revenue loss, Downes said it was too early to tell.
“But,” she said. “We’re getting there.”
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.