The city of Goleta is stuck in a bad deal with Santa Barbara County. When the city was formed in 2002, the county stood to lose a lot of revenue so it negotiated a long-term revenue deal with the fledgling municipality. In accordance with state law, the revenue neutrality agreement was negotiated and signed by the county and Goleta Now!, the group petitioning for cityhood.
The payment arrangement of taxes collected by the city being forwarded to the county is not in exchange for any services the county provides; contracts the city retains for certain services are negotiated and paid for separately. The intent of the revenue neutrality law is for regular payments to be made for a fixed period until the city is self-sufficient and the county is completely out of the city’s business. Additionally, the agreement gives the county a set time to prepare the necessary budget changes. Revenue neutrality agreements are standard procedure, perfectly legal, and they serve legitimate needs.
However, the agreement set up for Goleta does not include a “sunset clause,” the critical language stipulating a time limit to the arrangement. Fifty-percent of Goleta’s property tax revenue is to be paid to the county forever. Half the retail sales tax will be shared until 2012-13 when the county share decreases to 30 percent. Finally, 40 percent of the transient occupancy tax will be given to the county until 2012-13, at which point, the amount drops to zero.
The Goleta City Council is already talking about a renegotiation. In fact, the new council members spoke of the revenue-neutrality issue during last year’s campaign. Now, the new City Council is ever more aware of the city’s uncertain financial future. The recently adopted two-year budget is the last that can be “in the black” without cutting back services. At the same time, Goleta residents are voicing strong opinions for more services, particularly a recreation department or programs, and enhanced traffic and transportation projects.
Something will have to change. The answer to this dilemma may be multifaceted, including shifting budget priorities, changes to Measure D appropriations, and some business economic growth that will bring more cash to the city. Likewise, the county has a myriad of options, too, and it seems reasonable to look to its future for ways to offset a perpetual influx of funds from us.
For more information on the Goleta Valley Chamber of Commerce, visit www.goletavalleychamber.com or call 805.967.2500.