Santa Cruz Tax Increase Hits Snag At City Council

SANTA CRUZ, CA — It's still unclear if the City of Santa Cruz will get the chance to ask voters if they would support a proposed 0.5 percent sales tax hike as the city grapples with $21 million in revenue losses following the coronavirus pandemic and the most devastating wildfires in county history.

The tax increase would raise an estimated $6 million per year for a litany of city matters such as homelessness, affordable housing, recreation facilities and streets. It would bring Santa Cruz's sales tax rate to the county maximum of 9.75 percent. Any proposed tax hike must first be put on the ballot for voters to decide.

The effort stalled in a contentious marathon Tuesday night City Council meeting. Councilmember Sandy Brown said she would not support an emergency resolution — a procedural matter that would have paved the way for the council to vote on the tax hike. The emergency resolution required unanimous support to pass, and a majority of the council appeared ready to support putting the tax hike question on the ballot.

The council has limited time this summer to work out its differences. The county clerk legally has until Aug. 6 to give notice that the tax hike question will be included on November's ballot.

The council voted unanimously to allow Mayor Donna Meyers to call a special meeting to revisit the matter.

Take a look at the city's fiscal forecast, which includes help from the federal stimulus.

Brown said she agreed the city was "perched on the edge of fiscal emergency" and would have supported the emergency resolution under certain circumstances but wanted to see the city address two issues before she gave her OK. The issues were waste management and trash pickup in areas such as open spaces and spaces near homeless encampments and a living wage policy to support the city's lowest-paid employees, such as lifeguards and parks staff.

"Without any indication that any of that is going to support workers, I just can't do it," she said.

Councilmember Martine Watkins said Brown's comments blindsided her and felt like an ultimatum that oversimplified the complexity of the council's job.

"Nobody wins," Watkins said. "We lose resources, and ultimately we lose the opportunity for democracy to take place."

Some councilmembers expressed interest in working with Brown on her agenda in order to advance the tax hike effort. It remains unclear if that will succeed.

The tax hike was recommended by the council's revenue committee — comprising the mayor, Vice Mayor Sonja Brunner and Councilmember Justin Cummings — which began its work in January.

The city wrote in its report on the committee's findings that Santa Cruz now faces deficits "despite years of responsible and proactive fiscal management and multiple years of static and reduction-based budgets, with the unprecedented recession impacts" from the pandemic and the CZU August Complex Lightning fires.

The ballot language would read as follows.

“To protect quality of life in the City of Santa Cruz by supporting resources to mitigate the impacts of homelessness, create affordable housing, reduce wildfire risk, maintain City facilities and essential infrastructure, fix streets, support transit, maintain parks and recreation facilities for youth and seniors, fight climate change, and prevent reductions in important city services, shall the City of Santa Cruz be authorized to augment its General Fund by levying one-half of one percent sales tax, raising about $6 million annually?”