The Goleta City Council held a special meeting Thursday morning to consider some new tax measures for potential revenue enhancement.
The council was presented with six potential tax measures to put on the November ballot — a transaction use tax, a utility user tax, a parcel tax, a transient occupancy tax, a business license tax, and a documentary transfer and real property transfer tax — as well as a more in-depth analysis and presentation of potential cannabis business tax measures.
Each council member expressed interest in pursuing the transaction use tax, which would put an additional sales tax levy on top of the local sales and use tax.
“Even though (the transaction use tax) is a regressive tax, the burden is shared equally between people that don’t live here and people that do live here, and we have one of the lowest sales tax in the area,” Mayor Paula Perotte said. “So, I’d be in support of that — more so than utility tax or transient occupancy tax, or business license tax.”
With the city’s ability to impose this tax in increments of 0.25%, up to a maximum of 1.5%, the tax has the potential to generate revenue of $2.2 million to $2.4 million per 0.25% annually.
“I think it’s clear that the sales tax has the highest potential to generate the amount of revenue that really reflects the need of our city moving forward,” Councilman Kyle Richards said.
Multiple council members also agreed on their opposition of a business license tax, which, depending on the structure model used, could generate revenue of $2.2 million to $2.7 million, or $3.3 million for the city annually.
“For businesses, we want our small businesses to come, and we want to be known as a friendly city to mom-and-pop stores,” Perotte said. “We don’t want to make it harder, so I’m not in support of the business license tax.”
Additionally, some council members said they would not want to burden residents with a tax on necessities, including utilities.
The utility user tax could be imposed on residents and businesses in the city based on the consumption of utilities, including gas, water, sewer, telephone, sanitation and cable TV. According to city staff, that tax is estimated to generate potential revenue of about $4.7 million annually.
Other tax measures presented to the council include a parcel tax, which would allow the city to put a tax on parcels of properties within the city for a fixed amount, but the city could only impose it for a specific purpose. At $100 per parcel, this tax could generate about $96,000 annually.
Goleta currently has a transient occupancy tax rate consistent with the statewide average of 12%, which taxes individuals staying 30 days or less in hotels, motels or other similar lodging in the city. The presentation showed a potential revenue projection of $920,000 per 1% increase.
The documentary transfer and real property tax is a tax that the county imposes with half of the revenue remitted to the city. This tax is imposed on property owners who transfer interest in real estate within the city. If Goleta wanted to change the amount of the tax, it first would be required to become a charter city. The tax measure has a potential revenue projection of $300,000 per 55-cent increase.
The second half of the meeting involved an analysis and presentation on cannabis business in Goleta and how changes in tax rates would affect the city’s revenue.
While several recommendations were presented, the City Council directed staff to return with an item to further discuss extending allowable hours of operation for cannabis retailers and to address whether to tax medicinal cannabis.
Draft ballot measures are scheduled to be considered in a future Goleta City Council meeting between April and May and, if the council decides to do so, these tax measures would appear on this year’s November ballot.
— Noozhawk staff writer Serena Guentz can be reached at firstname.lastname@example.org. Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.