The What: On Tuesday, the Santa Cruz County Board of Supervisors voted unanimously to place two measures — a hotel tax increase and a single-use cup and bag tax — on the June 7 ballot.
The So What: The two measures would bring in an additional $2.4 million annually to be used in unincorporated county areas, said County Budget Manager Marcus Pimentel. He added that the revised budget forecast for this year, as of February, showed a deficit of $7.7 million.
About half of the county’s population lives outside of a formal city — often paying lower tax rates. Additionally, the relatively low property tax rates in the county as a whole, he said, make it hard to raise the money to properly serve those unincorporated areas.
Backgrounder: Here’s what each would bring to Santa Cruz:
Transient occupancy tax: Officials say the proposed increase to this tax, which is currently lower compared to neighboring counties, will help them maintain county resources and infrastructure. Data from 20221 polling showed that the top economic priorities for voters in the county’s unincorporated areas were affordable housing (83%), wildfire response, prevention and recovery (88%) and mental health services (87%).
The proposed increase would set the rate at 12% for hotels, motels and inns, and 14% for vacation rental properties. Both are currently taxed at 11%.
Single-use cup tax: This initiative asks voters if they want to change a 25-cent per cup and bag fee currently in place into a tax — with one-half going to the vendor and the other half going to the county. In working with research group FM3, the county found such a tax would produce $700,000 annually. An October 2021 poll of 600 county residents showed that 66% supported the measure. Funds from the tax could be used to reduce pollution, trash and plastics entering local waters and beaches, protect water quality and clean and maintain parks and public areas.
Pimentel: “Not only are we systematically underfunded, we are also a county that does a lot more than most other counties. … We have more populations served in our county than most other counties across the state. We happen to have more population that live in the unincorporated areas.”
Supervisor Ryan Coonerty believes the county needs to be resilient in its financial goals, and have reserves through taxes like these to respond to emerging needs: “We are facing so many uncertainties that we’ve seen in the last two years.”