[Noozhawk’s note: This is one in a series of articles on Noozhawk’s Santa Barbara Challenge, our public-engagement project on the city of Santa Barbara’s budget. Related links are below.]
They’re politically loaded terms but there’s just no way to get around it: the city of Santa Barbara can’t function without your taxes, fees and fines.
Every parking violation you paid last year went toward $2.3 million the Police Department received in 2010, its largest source of revenue. But that amount is only one small part of SBPD’s budget. Because nearly all of its expenses go to salaries and benefits for officers, the department gets a large chunk of its money from the General Fund — $33.2 million estimated for 2011.
From a related article, we learned that the General Fund, made up primarily of property, sales and bed taxes, pays for most of the city’s important services.
Each city department has a different mix of funding sources. Some are surprising. Like the fact that those library fines you pay for delinquent books only make up about 4 percent of library revenues.
Others are more obvious. For the Parks & Recreation Department over the past two years, the bed tax that helps fund programs has decreased, while fees and charges for programs have risen significantly.
On a much bigger scale, $20 million in property taxes went to funding the Community Development Department’s revenues. That’s the department that handles all of the city’s planning, building permits and the like.
In a previous article, we touched on where the city gets its money. The largest part of that comes from property taxes, which amounted to more than $43 million in 2010.
Sales taxes are the next largest source of revenue, at $17 million, and bed taxes, a tax paid when guests stay in local hotels, amount to $14 million. But because sales and bed taxes have taken the biggest hits — with losses just last year of $886,000 and $711,000, respectively — the General Fund has taken a brutal beating.
“Because (the General Fund) relies heavily on tax revenues and tourism, we ride the economic waves in both good and bad times,” said Bob Samario, the city’s finance director.
Samario said that with “normal” economic downturns, Santa Barbara is usually prepared for a decline in tax revenues for a couple of years. In the past, those downturns have been followed by a swift recovery — something that has not happened yet — even if the recession has been declared officially over.
High unemployment is one reason for the chronic blue mood, he said. California has the second highest jobless rate in the country at 12.5 percent as of late January. Only Nevada, at 14.5 percent, has higher unemployment.
Moderate growth is what we can expect for Santa Barbara’s economy, according to Samario. Although this fiscal year is looking more promising than prior years, municipalities may be facing a new reality.
So if we’re going to be here for a while as a city, what should we keep paying for, and what has to go? To avoid cuts, revenues must be raised, but that will take political will.
“There is a lot of negative sentiment right now toward governments as a whole,” Samario said. “I just think there would be considerable opposition to the city raising unrestricted taxes when there’s a strong feeling that city employees are overpaid and have bloated retirement benefits.”
Samario said special taxes — to help fund a creek cleanup or a new police headquarters, for instance — may have a better chance.
On the state level, Gov. Jerry Brown is trying to convince legislators to extend tax increases, but his hopes for getting the proposals on the June ballot look dismal right now. Whether those measures win voter approval — if they even make it to the ballot at all — could be a bellwether of public opinion that cities will be watching.
Until then, a prickly public will decide whether to raise revenues, and Samario says raising general taxes “will be a challenge for a long time.”