Adding to an already crowded November ballot, Santa Ana will place a proposed sales tax increase before voters in the hope of closing a growing budget gap.
Most Orange County residents now pay 7.75 percent in sales tax, which includes a statewide base rate plus a local add-on for transportation projects. Santa Ana’s proposal would increase the city tax by 1.5 percent for the first 10 years and then drop back to an added 1 percent for the next decade before expiring.
Each percentage point represents one penny of tax per dollar spent, so if the tax is approved, Santa Ana shoppers would pay 9.25 cents of tax per dollar when buying items such as clothes, furniture and restaurant meals. Necessities including groceries, prescription medicine and medical care are not subject to sales tax.
The proposed increase would give Santa Ana the highest sales tax in Orange County.
City Council members said they hated to ask for a tax increase, but it was vital to avoid cutting services and potentially risking bankruptcy. The council approved the ballot proposal on Tuesday, July 17.
With the city facing a projected $10 million deficit this year that could grow to more than $66 million in five years, the council must act now “or we keep pushing this out and potentially see a significant decrease in city services,” Councilman David Benavides said Tuesday.
Several residents objected and said they’d campaign against the measure, and one mentioned the fate of state Sen. Josh Newman, who was thrown out of office in a June recall over his support of a state gas tax increase.
“People are struggling. This is a very poor city,” resident Peter Katz said.
Santa Ana voters also will be asked to decide in November whether to replace a current fee system for recreational cannabis growers, manufacturers and sellers with a tax that would charge them a percentage of sales or a per-square-foot amount. Different rates would apply depending on the type of business – for example, retail sales, manufacturing or testing – and they would be capped at 10 percent of revenue or $35 per square foot.
Finally, several minor changes to clean up the city charter and a measure that would change council elections from at-large to by district voting also will appear on the fall ballot.
Source: OC Register