Santa Ana voters will decide in November if they want to keep a 1.5% sales tax increase indefinitely after city officials had to make millions of dollars in cuts to balance their budget this summer.
Elected leaders publicly said Tuesday it will be up to voters to decide if they want to continue to enjoy services and programs like graffiti removal, fixing parks and keeping emergency response times at the same level by weighing in on the ballot measure.
Mayor Valerie Amezcua said if the measure isn’t added on the ballot and approved by voters, future city councils will have to have hard discussions on what to cut to stay afloat.
“The conversation will be then where do we cut and who do we cut. So when you call 911 it may take 10 minutes, when you call fire it may take 15 minutes, when you call about that pothole it may take five days, six days, 10 days, and again, on the flip side, maybe we will never be there,” Amezcua said at Tuesday’s city council meeting.
“Whoever’s sitting up here, good luck, because I don’t know how you’ll keep the lights on.”
At the same time, city officials say even if voters decide to keep the tax, elected leaders will continue to have to grapple with projected deficits for the next ten years but the annual expected gaps won’t be as drastic or wide as currently estimated.
On Tuesday, city council members voted 5-2 to place a measure on the November ballot that if approved by voters would eliminate the sunset of the tax and a rate reduction, joining other OC cities looking at taxes as a way to reverse budget deficits.
[Read: Will Santa Ana’s Temporary Sales Tax Increase Become Permanent?]
Councilmembers Jessie Lopez and David Penaloza, who are both running for state assembly, were the dissenting votes.
Penaloza said officials have mismanaged taxpayer funds.
“One thing that this city and the city council – my colleagues up here – have failed to realize is also the mismanagement of funding and dollars goes hand in hand,” he said.
“I’ve seen the waste from department to department of how much money we’re just throwing out there and misspending and it needs to stop. We can’t just continue to raise our sales tax and turn to the voters every time that we’re in financial trouble.”
Lopez said the tax was supposed to be temporary and that was how it was first initially presented to voters.
“I just strongly feel like I can’t break that deal with our constituents,” she said at Tuesday’s meeting.
“There are many things that this council and I have disagreed with over the years that people have seen me pay a political price – for voting no on large unsustainable contracts that we’ve been openly discussing for many years that the city could not afford.”
Councilwoman Thai Viet Phan said voters will get a chance to decide what kind of city they want to live in with the incoming ballot measure.
“Do you like the additional removal of graffiti? Do you like the additional bus benches? Do you like the additional responses to clearing up potholes? Do you like the additional funding that we’ve had for youth programs, senior programs? Do you like these things? And if you do, you get to decide to keep it,” she said.
Measure X & Santa Ana’s Financial Future
The 1.5% sales tax increase, Measure X, initially approved by about 58% of voters in 2018 was supposed to last 20 years gradually dropping down to 1% half way through its term before being completely eliminated in 2039.
Since it was first implemented in 2019, the increase has helped pay for homeless mitigation efforts, public safety, fixing parks and streets, youth programs, council aides, a Vietnamese Community Liaison and the city’s legal defense fund for immigrants.
But as officials across Orange County – including Santa Ana – continue to roil with structural budget deficits, elected leaders in the heart of the region began to consider asking voters not to sunset the tax increase that brought in around $83 million last year.
[Read: How Rocky Are Orange County’s Municipal Budgets?]
“Due to the demand for public service and cities’ limited options for raising revenue, local sales tax add-ons have become increasingly common and permanent,” Assistant City Manager Kathryn Downs at Tuesday’s meeting
City staff previously warned elected officials they would be forced to make steep cuts if voters didn’t decide to keep Measure X alive at the ballot box this year, projecting a $30 million deficit in 2028-29 – the year tax rate is currently slated to drop.
If Measure X is kept alive by voters and maintained at the current rate, they are looking at a roughly projected $13 million deficit in 2028-29, according to a staff presentation.
“Our service levels have increased with the passage of Measure X, so if Measure X were to be made permanent, we should expect to have a fairly small structural gap to address each year, less than 2%,” Downs said.
“The small gap is driven by our expectation that rising costs will continue to outpace our modest revenue increases.”
Councilman Phil Bacerra said he doesn’t want to keep the tax but he doesn’t want to make drastic cuts to city services, adding elected officials need to focus on generating more revenue.
“Taxing is not going to be the long-term solution to our structural deficit,” Bacerra said. “This does not solve our problems, but I would rather try to solve the structural deficit that Assistant City Manager Downs showed in those slides versus the large gap that we saw during our budget presentation.”
He added that the revenue from the sales tax increase is decreasing and would be irresponsible to let Measure X end.
“We can’t continue to rely on that. If we don’t do something more than just reaching into our residents’ pockets and asking them to bail us out, Measure X is not going to be enough for us to continue to provide even just the current level of services in the future,” Bacerra said.
Elected officials already approved cuts for this upcoming year.
With the current rate, officials slashed about $11 million in spending and brought $2 million in additional revenue to balance the city’s books, cutting things like park maintenance, a police after school program, eliminating vacant positions and decreasing spending on part time positions.
They also decided to dissolve five resident run commissions to advise officials on green space, landmarks, youth programs, public landscape and murals to save $38,000 in the face of the projected $13 million deficit.
Officials finalized the move to purge the boards Tuesday, opting not to slash council members’ combined $420,000 budget for political aides paid by Measure X or their nearly $80,000 travel budget.
Penaloza said officials need to be more financially responsible with taxpayer dollars.
“There’s a lot of growth for both the city council and the city staff to make on what kind of expenses we’re allowed to make with our tax dollars,” he said.
“Because there’s a lot of waste.”
Hosam Elattar is a Voice of OC reporter. Contact him at helattar@voiceofoc.org.
