Orange officials are not ready yet to place a one-cent sales tax increase on the November ballot, despite warnings of looming cuts to core services like public safety and projections of a $20 million budget shortfall.
[Read: Orange Again Poised to Bank on Sales Tax Increase to Bail Out Bleak Budget]
It’s not the first time city council members have hesitated to put a tax increase before voters as they continue to grapple with how to address a longtime structural budget deficit they say has been passed down by their predecessors.
In 2024, city council members went back and forth struggling to get consensus on a proposed sales tax increase before deciding in the 11th hour to place a 0.5% sales tax measure that ultimately failed.
Councilman Jon Dumitru said they can’t make the same mistake as last time and the responsible step would be to place the measure on the ballot.
“I’m keenly aware that people have a lot of hesitation to vote on this dais for sales tax. I get it. It’s in some cases with some folks political suicide. You have to look past that and put the politics aside and have honest accountability with yourself,” he said at Tuesday’s meeting.
“Last time we waited till the last second, rushed and it became a monumental failure.”
Yet at that meeting, those same council members decided to continue a discussion on the 1% sales tax increase to their May 12th meeting and directed the city manager to spend money to educate residents on the need for the increase without yet placing it on the ballot.
Councilwoman Kathy Tavoularis, who called for the debate to be continued, said she also wants discussions on other revenue generating options including becoming a charter city, raising hotel bed taxes, utility taxes, taxing large parking garages and legalizing and taxing cannabis.
Tavoularis said even with the sales tax measure, costs will continue to go up – leaving them in a similar position in the future and officials need to present voters with more options.
“We’ve cut all we can cut, but the costs keep on coming,” she said at Tuesday’s meeting.
“We can’t put all our apples in one basket. That’s why I think it’s important that we don’t divide these discussions, that we look at everything as a menu of items, and not repeat the mistakes of our predecessors,” Tavoularis said.
If approved, the tax increase is expected to bring in $37 million to city coffers.
If the measure fails this time, officials say they will have no choice but to make even more cuts this time to core services like public safety to stay afloat and if they do nothing they’ll nearly deplete their reserves by the end of the decade.
Dumitru said while they should also consider other options, the council should move forward with the sales measure and without additional revenue they’ll be putting lives at risk because they’ll be forced to make cuts to public safety which will increase response times.
“This is not just about balancing a spreadsheet. This is about maintaining core services that keep the community safe,” he said. “Without additional stable revenue, we face very real decisions, and kicking the can will mean reducing service levels. There’s no way around it.”
Councilman John Gyllenhammer, who attended the meeting by teleconference, said it’s not the time to place the measure on the ballot and they should be more responsible with their spending.
“It’s important to have a really clear understanding of the 2026-2027 budget,” he said. “Based off of what I’m currently seeing, I don’t believe we need a sales tax.”
Last year, elected leaders already cut public services like library hours, sidewalk steam cleaning, ongoing maintenance to Santiago Creek, city-sponsored events, security at Old Towne parking garages and held a few vacant police and firefighter positions.
Even with the cuts, staff projects a $20 million budget deficit next fiscal year which they are proposing to balance mainly by transferring out $17 million from three different spending pots including their capital improvement fund and other service reductions.
Officials are also eliminating 50 vacant positions.
If approved, the sales tax ballot measure will include an 11-person body to oversee the revenue and there will also be an investment plan laying out spending priorities like street maintenance, reinstating police officer positions, police vehicle replacement and deferred facility maintenance.
Mayor Dan Slater said they do need to look at all their options, but the sales tax measure should be their priority.
“There is absolutely no way we’re going to get out of this mess without a sales tax increase,” he said.
“I do not want to see us putting this off to the last minute like we did last time. It’s not fair to our citizens. It’s not fair to our employees. All we’re doing is giving the voters a chance, an opportunity to say, ‘Do we want a mediocre city where we’re just scraping by or do we want to be a first class city?’”
The deadline to place the measure on the November ballot is July 14.
Dragging Feet on a Sales Tax Measure
Councilwoman Arianna Barrios said the process to place the measure on the ballot feels rushed and that last time they spent more time putting it together and communicating to residents about it.
“It’s a little disingenuous to be pounding the table right at this moment,” she said. “The best time to start this conversation would have been the day after the election.”
Councilwoman Ana Gutierrez said discussions on the measure should have happened months ago and pushed for the council to have a special meeting sooner to discuss all their options.
“Time is of the essence. We need to move but I would have liked this a lot sooner and I think a meeting dedicated just to talk about all of the potential revenue sources is what we need to do,” she said.
City Manager Jarad Hildenbrand said they have tried to schedule special meetings but council members haven’t been able to coordinate a time when they are all available – something Gutierrez tried to do on the dais Tuesday that failed.
Hildenbrand also pushed back on council members saying staff has been having budget discussions with them and the community and elected officials never agendized a discussion on placing the measure on the ballot until Tuesday.
“We’ve just been sort of sitting in limbo waiting for the item to be agendized. Mr. Mayor, you finally agendized the item. Here we are tonight, discussing it and we have two and a half months to formulate a strategy to figure out what, if anything, you even want to include on the ballot at this point,” he said.
Hildenbrand added the community knows about the budget crisis and they want to know what their elected leaders are going to do about it as the city bleeds staff members.
“At this point in time, the community is really waiting for the City Council to make the decision,” he said.
“Do we look for long term revenue and material revenue that will help solve the budget and provide financial stability, or if we don’t go down that path, what cuts are next?”
Hosam Elattar is a Voice of OC reporter. Contact him at helattar@voiceofoc.org.