Quick Take
Voters in March could decide on whether to increase Santa Cruz County's sales tax rate by a half-cent to 9.5% if the board of supervisors approves including the question on the March 5 primary ballot. The increase could bring in $10 million annually to a county struggling financially.
Santa Cruz County voters are poised to decide in March whether they want the sales tax in unincorporated parts of the county to increase a half-cent to 9.5%.
The Santa Cruz County Board of Supervisors is scheduled to vote Tuesday to either put the sales tax increase on the March 5, 2024, ballot or hold off for a future election. In a memo to the board, the county’s chief executive, Carlos Palacios, said the increase could bring in a steady revenue stream of $10 million per year.
The decision on whether to include the sales tax increase on the ballot caps off a year in which the county’s challenging financial situation was brought up often, particularly as it relates to the government’s ability to finance disaster recovery and make dents in building affordable housing. According to numbers presented by Palacios, Santa Cruz County earns far less tax revenue per capita than any of its peer counties, but serves a far greater percentage of the county’s residents than those same peers.
In 2021, the county received $463 per resident in tax revenue; the state average was $1,448, and the next-closest peer is Monterey County, which received $1,074 per resident. In 2021, 50.5% of the county’s residents lived outside of city jurisdictions and resided on unincorporated county land. This means, for these residents, the county government plays the same role and must offer the same services as a local city government. The next-closest peer there is Sonoma County, where 27.7% of residents live in unincorporated areas. In counties across the state, an average of 42.5% of residents live on unincorporated county land.
That’s all to say that the county is providing a broader level of service while receiving a fraction of the money to do it, as compared to the rest of the state.
If approved by voters, Palacios said the money would focus on the county’s ability to build housing and streamline pre-development costs, and to finance homeless navigation centers in the city of Santa Cruz, Watsonville and the unincorporated areas of the county, disaster recovery and road repair.
If the supervisors approve Tuesday, every voter in Santa Cruz County will see the question on their ballot, regardless of whether they live in a city or in an unincorporated area. Voters in the city of Santa Cruz would see this referendum paired with a proposition from the local government to increase its own sales tax rate within city boundaries by a half-cent, to 9.75%. These are separate taxes and consumers would not see both taxes applied to a purchase, only the jurisdiction tax where the purchase is made. Groceries, prescription medicine and feminine hygiene products would all remain exempt from the tax.
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