The City of Santa Barbara is facing a $7 million budget shortfall and, behind the scenes, city leaders are thinking of putting a half-cent sales tax on the November ballot.

The information came out during Friday afternoon’s State of the City event put on by the Santa Barbara South Coast Chamber of Commerce.

“Our revenue is not growing fast enough to meet our expenses,” Assistant City Administrator Rene Eyerle said. “We are going to have some challenging decisions ahead to make sure we are maintaining the quality of life that all of our residents expect.”

While traditionally the State of the City event offers a cheery portrait and recap of the previous year, Eyerle’s comments opened the door to what is expected to be a robust conversation when the city budget is released in two weeks.

The event was held at the Hilton Santa Barbara Beachfront Resort, 633 E. Cabrillo Blvd., inside the main ballroom. More than 400 people attended the three-hour luncheon, dining on salad, chicken or a vegan option, and a cake dessert.

Santa Barbara Mayor Randy Rowse, Goleta Mayor Paula Perotte and Carpinteria Mayor Al Clark spoke individually about the state of their cities, while their speeches were followed by a panel discussion featuring Goleta City Manager Robert Nisbet, Carpinteria City Manager Michael Ramirez and Eyerle.

A who’s who of South Coast business and political leaders attended the event to learn about the state of the South Coast cities.

Kristen Miller, president and CEO of the chamber, kicked off the event and focused on how government and the private sector should work together to create more housing opportunities on the South Coast.

“In a world where the pace of change is only accelerating, the need for innovative and forward-thinking economic development strategies cannot be overstated,” Miller told the crowd.

She identified three main obstacles for businesses: access to a qualified workforce, affordable housing for that workforce and navigating a complex regulatory environment.

“Our response to these challenges has been both proactive and collaborative,” Miller said.

Th chamber is working on an employee-sponsored housing consortium plan called “The Road Home,” which calls for 10,000 new units of housing in the next 10 years geared toward local workers. The chamber is partnering with about 20 local businesses, which represent about 26,000 employees. The consortium would be a legal entity where employers would pool money and buy into a master lease or buy units for their employees.

Miller received an ovation when she said the program would allow “forward-thinking employers to secure new housing stock for their employees and guarantee housing for our local workforce.”

Clark, in his speech, touted Carpinteria’s natural beauty, pointing out the Carpinteria Harbor Seal Preserve and Rookery.

“You can see the whole lifecycle right there in Carpinteria,” Clark said. “These natural elements are all economic assets. They are the goose that lays the golden eggs.”

He also noted the city’s efforts to maintain Carpinteria’s small-town charm, mentioning ordinances the City Council passed that restricted big-box and chain retailers.

“Studies show that for every dollar spent at a non-chain store, up to 45 to 70 cents are retained in the local economy, as opposed to 11 to 17 cents per dollar at a chain store,” Clark said.

Perotte delivered the same speech she did earlier in the week at Goleta’s State of the City.

“Today, we have higher than ever participation by our residents in our city’s decision-making,” Perotte said. “This is the result of deliberate steps we have taken to better involve Goleta residents in governing the city.”

She talked about how the city created the Public Engagement Commission, moved to nighttime-only City Council meetings so working people can attend, and provides Spanish-language translation in its communications.

City Manager Nisbet said property and sales taxes are flat, but that hotel bed taxes are down.

“When I looked at the 10-year trend for Goleta, that had never happened,” Nesbit said.

It was Eyerly, however, who seemed to have the most to say on Friday. In addition to dropping the bomb about the budget deficit, she addressed the need for more workforce housing and the importance of reducing homelessness.

“We have to work to keep people in their homes in the first place,” Eyerle said. “The problem is getting worse, not better. If we can keep people in their homes in the first place, then we don’t have to try to worry as much about services and other issues when they become unhoused.”

Rowse introduced new Santa Barbara City Administrator Kelly McAdoo, who will take over in May.

“Housing, particularly workforce housing, has been a consistent theme in Santa Barbara, since before anyone can remember,” Rowse said.

He said the city staff has done an excellent job hitting “never-ending curveballs from Sacramento.” He complimented the city’s Housing Authority for various projects, including the acquisition of the Quality Inn motel to build housing for the formerly homeless.

He mentioned the city’s partnership with Santa Barbara County to provide small homes for formerly homeless individuals. He also acknowledged the work of the Santa Barbara Police Department and said it is “a model for community policing.”

He said the “big news in housing” is the sheer number of projects in the pipeline, including projects on Milpas and Carrillo streets, and Paseo Nuevo.

“There are some truly transformative projects coming our way in the near future that involve a lot of additional residential units,” Rowse said.