Fullerton residents could soon be asked to vote on two separate dedicated sales tax increases as the city faces a $3.9 million budget shortfall.
It’s the latest in a wave of Orange County cities to consider a sales tax hike to patch budget deficits.
Last November, the nearby City of Orange asked its voters to increase sales tax to patch a multi-million dollar budget gap – a move voters narrowly rejected and left city officials scrambling to generate more tax revenue.
[Read: Orange May Roll Out Paid Parking in Old Towne Amid Budget Woes]
In neighboring Buena Park, voters last November overwhelmingly decided to increase sales tax in the city to 8.75%.
Now, Fullerton City Council members are directing staff to research options for placing two sales tax increase proposals on a future ballot after all five officials voted in favor of the move at the May 20 council meeting.
One proposal is a dedicated tax fund geared towards fixing roads – a chief complaint amongst residents in one of Orange County’s oldest cities. Another sales tax increase proposal would be earmarked for public safety spending.
The proposals consist of two dedicated 0.5% add-on sales taxes measures —one for streets and infrastructure and another for public safety, according to the staff report.
If both are enacted, that would bump the city’s overall sales tax rate to 8.75%.
Since the proposals are earmarked for a specific purpose, at least 66.7% of Fullerton voters would need to approve the measures for them to go into effect.
It comes after Fullerton held a special meeting on May 13 to review the budget and present possible solutions to the looming deficit.
Mayor Fred Jung said it was important to give the taxpayers the opportunity to vote for their priorities.
“Let the voters decide,” Jung said at the May 13 meeting.
Fullerton City Manager Eric Levitt said both half-cent increases would go directly to streets and public safety.
“We’d have to analyze it better to see whether it would bring the deficit all the way down, but it would definitely have a positive impact towards the general fund and a positive impact towards improving streets,” Levitt said at the May 13 meeting.
Councilman Ahmad Zahra raised concerns over having two separate ballot measures and said a 1% general tax might have a higher success rate among voters.
“My concern is that it’s going to confuse the public,” Zahra said at the May 20 meeting.
“I don’t know if the votes are out there, and if we put two, I’m a little worried that now we’re even diluting that,” Zahra said.
Councilman Nicholas Dunlap said giving voters options is always a good thing.
“I don’t share the cynicism of my fellow councilmember,” Dunlap said at the May 20 meeting.
Jung said he supported the sales tax increase, which would help maintain the city’s budget for police and fire services.
“Having a specific sales tax geared towards public safety addresses some of the general fund constraints that we’re experiencing right now,” Jung said at the May 20 meeting.
Fullerton is currently proposing allocating 48% of the $137.8 million general fund to police and 27% to fire, according to the city website.
Residents Propose Tax Increase Time Limit
Resident Karen Lloreda said she supported an increased sales tax with the condition that a sunset date would be included to bring the item back to voters after five years.
“That gives people confidence that this isn’t endless, that it’s not some indefinite thing,” Lloreda said at the May 20 meeting.
Resident Todd Harrison said including a sunset clause might help make the add-on sales tax more appealing to voters.
“It at least increases the probably pretty crappy odds of being able to pass an increasing sales tax option on the general ballot,” Harrison said.
Dunlap said he also supported a sunset clause, but added it is crucial to maintain a commitment in the general fund to roads and infrastructure.
“I think it’s important that the general fund continues to make those investments,” Dunlap said at the May 20 meeting.
Sales Tax Proposal Could Fund Street Upgrades
Harrison said that he is usually against increasing taxes, but he would support a tax that goes directly toward street repairs.
“Fullerton’s single biggest issue is we can’t afford to fix the streets,” Harrison said at the May 20 meeting.
Jung said the current $8 million budget for streets was not enough.
“For a city of our size it should be double that, maybe even triple,” Jung said at the May 13 meeting.
Zahra said out of necessity the city needs to generate revenue to dedicate to repairing the streets.
“All the roads need work and we need money,” Zahra said at the May 20 meeting.
The proposed 0.5% increase could generate an estimated $15 million in new funds dedicated to street infrastructure and repair, according to the staff report.
The measure could appear on city ballots in the November 2026 general election if staff and city council move forward with the initiative.