Capitola’s Measure Y would up sales tax, raising $2.2 million a year

Capitola residents will be asked this November to approve an increase in the city’s sales tax rate, from 9% to 9.25%, raising an estimated additional $2.2 million a year for the general expenses of city government.

The most recent time Capitola’s sales tax rate increased was in 2016, when the Measure F ballot item that year raised it from 8.75% to 9%. That measure is set to expire at the end of 2027. This year’s Measure Y would replace Measure F with a higher rate of 9.25%, and a new expiration date of 2034.

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A “yes” vote on Measure Y would authorize the city to repeal the 2016 0.25% hike and replace it with a 0.5% hike, bringing the sales tax to 9.25% from its base rate of 8.75%. A “no” vote would reject the proposed hike and keep the current rate of 9%.

The measure going before the city’s approximately 7,000 registered voters needs a simple majority to pass.

If passed, the city expects the tax to raise about $2.2 million annually, and about $22 million over its 10-year life. The tax would expire after 10 years unless extended by voters. 

Even at 9.25%, Capitola would still hold the lowest sales tax rate of any city in the county. Santa Cruz, Scotts Valley, and Watsonville’s are all at 9.75%.

Measure Y was crafted by the Capitola City Council, and is aimed at funding essential city and general government services like road and infrastructure repairs, youth recreational programs and traffic safety measures. All revenue raised by the tax would go to the city’s general fund, and the city council would ultimately decide how that money is spent.

It’s on the November ballot without a listing of formal opposition.

Capitola Vice Mayor Yvette Brooks told Lookout that the city has not publicly outlined specific areas where it would like to spend the additional tax revenue. But she said there is consensus on the council that a significant amount of the money would go toward city staff salaries, the police department and replenishing some of the emergency money spent on storm repairs over the past few years. She added that maintaining the city’s parks and recreation department is a big priority for her, personally.

“We are a community that has gone through multiple natural disasters since I’ve been on council, and these things take away from our goals of fixing streets and paying for other things,” said Brooks, who has served on the Capitola City Council since 2018. “This is an opportunity to create a more balanced budget — this is to get us to pay the bills at the end of the day.”

In order to gather more information about what the community wants and needs, the city is hosting a strategic plan community forum on Tuesday, Oct. 1, in order to better inform the city’s budget process. Brooks said she and her colleagues are proud of the progress the city has made post-pandemic and post-storms to pick up the pieces of a battered town, and now are interested in hearing what residents want.

“The question [of how to spend the money] doesn’t just lie with me as a councilmember. My goal is to hear the city and gather that information,” Brooks said. “Our county has been through a lot, and we’re still going through it. We’ve had many great accomplishments and it’ll be interesting to see what the community wants next.”

Brooks said the city anticipates that the majority of the tax — more than two-thirds — will be paid by visitors, due to the city’s high levels of tourism year-round. 

“It’s important to me, our council, and our community that we see this through, and I think this is also why you’re not seeing opposition,” she said. “Our employees and police getting what they need is important to all of us, so I think the message here is that the community is coming together.”

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