In February 2018 the Santa Cruz City Council declared a "Fiscal Emergency" based on four major, growing deficits in the City budget over the next few years. The Council also approved a ballot measure, Measure S, to raise Santa Cruz sales tax from 9% to 9.25%. If Measure S passes, the increased tax would be equal to twenty-five cents per $100 spent. The tax measure would generate approximately $3M annually and all funds would remain in the City to support local services.
For a concise overview of the City's fiscal crisis and plan for financial stability, please click here.
To read frequently asked questions, as well as to see a list of cuts the City has already made to the budget, please click here.
To see the official language of Measure S as provided by the County Elections Department, please click here.
The City budget has been impacted by four trends that are also creating significant gaps in most California cities General Funds.
Four trends affecting Santa Cruz and most California cities' budgets:
Changes in traditional revenue sources -- for example, the rise in online sales has deeply affected the sales tax revenue that cities get, as has the rise in electric vehicles and increased fuel efficiency, has affectedthe gas tax revenue cities get.
State investment losses -- CalPERS, the entity that funds and manages pensions for state and local government employees, pays pensions with a mix of investment returns and city fees. During the Great Recession, CalPERS did not adjust their investment projections. As a result, the losses they suffered caused a huge gap between what they took in -- and what they paid out. Now cities are expected to back-fill the gap, which is significant.
Increases to the basic costs of providing services -- just like all businesses, non-profits, and public agencies, the City is seeing increases in expenses like utilities, personnel, and construction.
Aging Infrastructure -- again, like many California cities, much of Santa Cruz's infrastructure is over fifty years old and has either reached or surpassed its useful life span. As an example, drivers in Santa Cruz have probably experienced driving on flooded streets when our decaying storm drains back up during rain events.
To read an article about how Santa Cruz, specifically, and other California cities budgets are being impacted please click here.
The City proposes a quarter-cent sales tax increase to help balance the budget and maintain services. Measure S will be on the June ballot so that the community can decide whether to increase current sales tax from 9% to 9.25%