Quick Take
Santa Cruz County's Measure K was meant to bring in millions of new sales tax revenue, a bright spot in a looming budget crisis. However, a new lawsuit from Boulder Creek resident Bruce Holloway has thrown that money into limbo.
Conversations around money in Santa Cruz County this year are as tense as they’ve been in recent memory. No moment better depicted that struggle than the May 22 fight between the board of supervisors and the county’s chief executive over the latter’s decision to put no tax revenue into the county’s roads.
Responding to climate disasters over the past seven years has put the county in the red by tens of millions dollars. Money is in short supply. Chief Administrative Officer Carlos Palacios said funding roads would mean cuts and layoffs elsewhere. District 1 County Supervisor Manu Koenig challenged Palacios: What about the $7.5 million in new revenue from the half-cent sales tax increase county voters passed in March?
Despite overwhelming approval of that measure, and although the government has begun collecting the tax revenue, Palacios said the county’s ability to spend that money, intended for homeless services, parks and housing, would likely be delayed thanks to a court challenge from a single resident.
Down the street, as the temperature was rising in the supervisors’ chambers, Boulder Creek resident Bruce Holloway sat inside Lulu Carpenter’s downtown Santa Cruz location, attempting to wave down the coffee shop’s owner and figure out why his bagel order was so delayed.
Holloway, a retired Silicon Valley computer engineer, has been fighting the sales tax increase imposed by Measure K since December, when the county decided to put it on the ballot. All county residents, including those in the cities of Watsonville, Santa Cruz, Capitola and Scotts Valley, were eligible to vote on the tax increase despite it being levied in only the county’s unincorporated communities.
Holloway, suntanned with combed-over salt-and-pepper hair and wearing a black T-shirt that read “Boulder Creek,” looked around the coffee shop.
“The people of [the city of] Santa Cruz get to vote on a tax where I live, but I don’t get to vote on a tax where they live?” Holloway said. “The tax is only being levied on us and that just seems fundamentally unfair to me.”
Holloway’s challenge to Measure K has evolved since his litigious path began in December. At first, he wanted to sue the county to exclude voters in the four incorporated cities from weighing in on the tax increase but a county judge denied his petition. Following voter approval, Holloway considered suing so that only unincorporated voters’ ballots would count. But 50.4% of those voters supported the tax increase, so he wouldn’t have affected the result. Now, in an updated lawsuit filed last Wednesday (after a monthslong search for an attorney), Holloway wants to restrict how the county spends the money.
Measure K was advertised to voters as a permanent sales tax increase that would pump sorely needed revenue into the county’s general fund coffers — $7.5 million in the tax’s first year and then around $10 million annually in the years following. Voters throughout the county would vote on it because the money would be used for services that benefit everyone, regardless of jurisdiction. Holloway said asking a city resident if they support a new tax that would benefit them without charging them amounts to “an IQ test.” His latest argument is that since the tax increase is levied only in the county’s unincorporated communities, that’s where the money should stay.
Holloway said his issue with Measure K started with 2018’s Measure G, a half-cent sales tax increase that was also levied only in the unincorporated areas but voted on and spent countywide. He said he wants to answer the legal question — whether the county can levy a tax on just one community to benefit everywhere else — before “the county does this a third time.”
Holloway’s lawyer, Chris Skinnell of San Rafael-based firm Nielsen Merksamer, and assistant county counsel Michael De Smidt met Monday with Santa Cruz County Superior Court Judge Syda Cogliati to discuss the case and set a hearing date for Aug. 12.
Following the conference, De Smidt told Lookout the county wants Cogliati to toss the case because the 60-day statute of limitations on challenging Measure K expired before Holloway filed his updated lawsuit on May 29. The county says that the shot clock began on Election Day, March 5, when voters formally approved the measure. Holloway’s side argues it began on April 2, when the county clerk certified the election results. State law says “[a challenge] shall not be filed more than 60 days after the approval of the enabling ordinance by the voters unless the authorizing legislation specifies a longer period.” It’s unclear whether the shot clock rule will impact Holloway’s new lawsuit, since he is not challenging the imposition of the tax, but rather how it is spent.
Over his everything bagel with cream cheese at the downtown coffee shop, Holloway recounted some of his other lawsuits against government agencies over the years, including Santa Clara County and the San Lorenzo Valley Water District regarding spending and Brown Act violations (this is his first bout with Santa Cruz County). He views each lawsuit as a win-win. Even if he doesn’t win the legal argument, he sees the education as a consolation prize, albeit an expensive one.
“Every time I do a lawsuit, I’m buying a master’s degree; if there is anything about this subject I don’t understand, I’m going to learn what it is,” Holloway said. “I’m going to learn why I was wrong, but usually I learn why I was right. My dad has two master’s degrees. I don’t have any. But every time I do a lawsuit, I’m going, ‘Man, I’m buying a master’s degree.'”
Yet, Holloway’s alternative education has villainized him among some county officials. In his opening remarks on the budget in May, before Holloway had filed his updated lawsuit, Palacios, without using Holloway’s name, drilled into him for single-handedly causing financial upheaval as the county eyed what many have called a budget crisis.
“Recently, an individual has indicated that he intends to pursue [a lawsuit] over Measure K … the ramifications for the county and the community are severe,” Palacios said. “It is a difficult budget year. Measure K was going to help us balance that budget but now it is subject to this potential lawsuit. That also provides another layer of uncertainty.”
Palacios said without Measure K money, the county would struggle to fund a year-round homeless shelter and three navigation centers, as well as soccer fields at Pinto Lake Park, baseball fields at Aptos Junior High School and a community gathering space in downtown Boulder Creek, among dozens of other projects.
Lookout requested an interview directly from head county counsel Jason Heath, but county spokesperson Jason Hoppin responded to the request. Hoppin, who earlier called Holloway’s move to hold up critical county revenue “unconscionable,” said vaguely that “existing state law” allowed the county to impose a tax on one jurisdiction and spend the money on countywide priorities, but did not get more specific.
“This is one man trying to replace the will of the people with his own, and in the process is preventing our residents from seeing significant community benefits, from homeless shelters to new fields for children to play,” Hoppin wrote via email. “It’s a bizarre move given that Measure K passed in every jurisdiction, and it will ultimately prove futile.”
Holloway shrugged off the criticism.
“I don’t quite see it that way; I’m just one little guy in a T-shirt. I’m doing all this stuff? I don’t have that much power,” Holloway said before shifting his rhetoric to the third person. “You should ask the county why they didn’t just do what Bruce said in the first place. Bruce said run the election in the unincorporated areas, and Bruce said you’d still win. And you did. So why don’t you just do it my way the first time and then it would all be settled.”
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