Officials in the City of Orange are the latest in OC debating becoming a charter city, with one city councilwoman proposing the idea as an effort to dig the city out of potential municipal bankruptcy after a sales tax increase failed at the ballot two years ago.
General law cities like Orange follow the state’s rules of governance while charter cities like Anaheim, Irvine and Huntington Beach have some broader authority to set their own select rules on levying taxes and public contract bidding.
Reggie Mundekis, a resident and local government watchdog, called on officials to focus on addressing the city’s bleak financial situation and said the effort to become a charter city was politically motivated.
“It’s just amazing every week that people ask you to fix our budget situation and to get more money into the city, and you just look the other way. No one ever asked for this charter. But for some reason, it’s a priority,” she told council members at their Tuesday meeting.
“We don’t need it. Please work on the budget issues, please. We’re begging you.”
Councilwoman Kathy Tavoularis, who called for the discussion, said city officials haven’t really proposed solutions to their budget problems and a proposed charter was a way to quickly address their financial issues with one measure on the ballot.
“It has to do with local control. We are in a fiscal emergency, and we have to start doing something, and we have to start taking the reins of this,” she said.
“I drive around Orange and things are broken and we’re not fixing them.”
Last summer, consultants warned Orange City Council members the city would be bankrupt in a couple of years if they don’t make radical changes.
[Read: An End to The ‘Orange Way’: Scrambling to Prevent Municipal Bankruptcy]
That blunt assessment came months after a 0.5% sales tax increase on the 2024 election ballot that would have generated $20 million annually for a decade failed to get enough support.
A proposed early charter draft lays out different taxes that could bring in more revenue including a 14% tax on guests at hotels with 11 rooms or more and a 10% tax on guests at hotels with 10 rooms or less.
The current hotel tax in the city is 10% – regardless of the amount of rooms.
The draft charter also laid out a new 4% franchise tax on utility, internet and phone companies operating in the city and a new 14% tax to park at garages with at least 200 spots
It would restrict two-thirds of the general fund to police, fire and code enforcement.
Councilwoman Arianna Barrios and Councilwoman Ana Gutierrez said there needs to be a discussion on potential tax measures first and the budget issue should be the priority, questioning if the city should be exploring a charter right now.
“I’m not adverse to discussing it more, but I think that we need to discuss the budget and see how that lines up,” Gutierrez said.
Tavoularis pointed to the proposed charter saying it would bring in $10 million in revenue from hotel, parking and franchise taxes.
“It brings in about $10 million of new general fund income,” she said. “I haven’t heard anybody else say about let’s bring in another $10 million revenue, and we do it just by doing this.”
She also said the city can’t wait around to address their financial crisis.
“We don’t have time. We are wasting time. We have sat here for a year and a half and only offered the city one solution, and it failed. That’s it,” Tavoularis said.
Barrios said officials have been working to address the city’s financial woes and $10 million is just a drop in the bucket in solving the problem.
“Yes, this is $10 million. A sales tax at a minimum was $19 (million) for half a cent and $38 million for a one cent (increase). Much bigger numbers to settle our problem,” she said.
Barrios told her colleagues the city’s running up against a financial cliff.
“When we looked at the budget two meetings ago, our budget – as we had budgeted –was in la la land and our actual revenue of what we were able to spend was $158 million. That’s where we’re at and that’s where our budget needs to be regardless of anything else. That’s all the money we have right now. Period. End of story,” she said.
Barrios said officials still spent between $600,000 to $1 million at that same meeting and that the taxes should be discussed separately before being wrapped into the charter debate.
Mayor Dan Slater argued a charter would provide many benefits including more local control.
He also said that no solution should be off the table when considering how to address their budgetary problems and that a charter measure would allow residents a say in how they see it best to tackle the issue.
“We’re going to hold it up to the voters, and it’s going to be their decision on whether we want to go in this direction and I think to give the voters that opportunity to help us figure out more ways to get out of this financial difficulty, I think is a good thing,” he said.
Further discussions on potential tax measures and the city charter are expected to come back before the council.
Officials in Orange aren’t the only ones eying a city charter as a host of elected leaders call for greater local control on issues like housing.
In Fountain Valley, city council members hit the brakes on moving forward with a charter city ballot measure this year and instead looking to gauge community interest in switching the governing structure.
[Read: Fountain Valley Pauses Charter City Proposal, Residents to be Surveyed]
Fullerton City Council members have also debated a charter city measure ahead of the November election.
Orange leaders aren’t the only ones in the region also eyeing sales tax measures to address their financial dilema as city spending steadily outpacing revenues year after year – threatening municipal services like public safety, city events and local libraries.
Barrios said if they don’t consider tax increase measures, they’ll need to make more cuts.
“We need to pick where we’re going to live and stop worrying about the drapes, because the drapes – we are so far from the drapes,” she said.
“We need to pick our neighborhood and right now our neighborhood is the ghetto so we need to get used to that kind of living and work from there.”
Hosam Elattar is a Voice of OC reporter. Contact him at helattar@voiceofoc.org.