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City of Orange approves local sales tax measure for November ballot

City of Orange voters will be asked in November to approve a half-cent local sales tax that officials expect would raise approximately $20 million annually for 10 years and help Orange climb its way out of a revenue deficit that has persisted for more than a decade.

The City Council approved the ballot measure in a 5-2 vote during a special meeting Friday, with councilmembers John Gyllenhammer and Jon Dumitru voting no.

Asking voters for the half-cent tax that would sunset after 10 years was an 11th-hour compromise. The council had to approve a tax proposal by Friday to get any such measure on November’s ballot, the city clerk had said. Six previous motions for various tax measures – up to one cent – failed before councilmembers approved this version.

Gyllenhammer said he would support no sales tax at this time, while councilmembers Denis Bilodeau and Kathy Tavoularis said they would support no more than a half-cent measure. Councilmembers Arianna Barrios, Ana Gutierrez and Jon Dumitru supported a one-cent measure and Mayor Dan Slater supported either a one-cent or half-cent measure.

Dumitru and Barrios expressed concern that the half-cent measure might not be enough to help Orange dig itself out of its fiscal hole. But city staffers said their projections indicate that recently slashed spending and a $20 million annual revenue bump from a local sales take would mean Orange wouldn’t run a deficit again for at least 10 years – budget charts produced by city staff show the margin between revenue and spending would remain thin and get thinner over the years.

Bilodeau encouraged the city to maintain a “lean position,” saying he feared how it could spend the second $20 million per year that a 1% sales tax would likely generate.

“I know that we can get along with a half-cent sales tax,” Bilodeau said. “That will generate 20 million. That is the identified budget deficit. I don’t want to give the city $40 million. I’m afraid what it will do with it.”

Orange has faced a structural budget deficit since 2009, officials have said. Many years, it has used one-time revenues such as federal money to pass a balanced budget. But last year, it ran a $19 million deficit, drawing down reserves to critical levels, officials said.

Without a tax bump this fiscal year, the city is projected to be in the red about $8.5 million, even after the council approved making millions of dollars of cuts to public services at recent meetings. A list of approved budget reductions as of July 2 is available to view online, and councilmembers say there could be more cuts coming — tax or not.

For months, the city has been calling its deficit a “budget crisis,” creating a website to explain its financial woes and holding informational meetings around town to tell residents why it needs additional revenue to maintain services, including public safety.

A poll of likely voters conducted by a political consulting firm in late May and early June estimated that the likelihood of a local sales tax gaining approval in November is practically a toss-up. The consultants from Fairbank, Maslin, Maulin, Metz & Associates said their data from 800 likely voters suggests getting the measure to pass will be a close call, with about a 1:1 ratio of people surveyed saying they’d “definitely vote yes” to those saying they’d “definitely vote no.” They added that increased public awareness around Orange’s fiscal problems could sway the vote.

On Friday, numerous Orange residents addressed the council directly, some asking for their chance to vote on a tax and others decrying the consideration of raising a local tax.

Among those who spoke was Orange County District Attorney Todd Spitzer, a longtime Orange resident, who attended the meeting to express his vehement opposition to any local sales tax measure.

“You are following, if you raise a tax, in the same direction as the State of California,” Spitzer said, adding that although he was speaking in his individual capacity, he could speak as the district attorney, as well. “I never thought in my wildest dreams when I moved here 25 years ago that this would be the place that we raised taxes.”

He said the city should prioritize police and fire. “All the other accouterments of this city should go by the wayside until you get your financial house in order,” he said. “You have to make cuts.”

Sales tax in Orange County is 7.75% and 10 cities have added their own local taxes as an additional revenue source. The highest are Los Alamitos and Santa Ana at 9.25%.

After hearing over an hour of public comments, several councilmembers including Bilodeau, who used to work for Spitzer, acknowledged that the city has not been able to balance its budget even while making drastic cuts to most services beyond public safety.

Spending on police and fire consumes about two-thirds of Orange’s general fund budget, and the majority of councilmembers came to a consensus that the city will need the revenue boost from a sales tax to maintain public safety levels.

The majority of the council identifies as conservative and multiple members said last week they have rarely if ever voted for any tax measure in their lives.

But Slater encouraged them to transcend political ideology to act in the best interest of Orange.

“We are here to lead and make competent, informed decisions that are in the best interest of our citizens alone and not based on any outside groups, including political parties,” Slater said. “Whether you’re philosophically opposed or supportive of a sales tax isn’t the question. The question is are you willing to let democracy function and let the citizens decide?”

In November, the voters of Orange — a politically purple city — will indeed have their say.