Santa Cruz City Council declared a fiscal emergency during the most recent meeting on Tuesday afternoon and moved to place a sales tax on the June 2018 ballot. If the taxation measure receives enough votes during the special municipal election, the sales tax rate will increase from 9 percent to 9.25 percent, potentially bringing in a projected annual revenue of $3 million.
Proposition 218, which restricts a local government’s ability to levy taxes, declares that local governments can only place taxation measures on general election ballots. In order to include the sales tax in the special municipal election and override this regulation, the City Council had to unanimously vote for the declaration of a fiscal emergency, councilmember Sandy Brown said.
“Fiscal projections looking out over the next few years suggest that we will be in a very, very difficult situation with respect to balancing our budget,” Brown said. “It really won’t be possible without additional revenue if we don’t want to do significant layoffs and cuts to services.”
Brown also said the council will be presented with a budget proposal in May that includes $5.5 million in cuts to the city’s budget. Although council members believe it is a priority to maintain direct line service workers, Brown said, Parks and Recreation would probably be affected the most.
“That [sales tax revenue] will be allocated to whatever the greatest need is,” Brown said, “and whatever the council decides is the greatest need during budget deliberations in the future.”
Because the deadline to add a taxation measure to the June 2018 ballot is March 9 and there is not another city council meeting before then, the sales tax will be the only tax on the ballot.