CITY HALL — Santa Monica voters in November could decide whether to increase the local sales tax by a half percent, a move that would bring in an estimated $13 million per year in additional revenue for City Hall.
The City Council on Tuesday is set to consider placing the measure on the Nov. 2 ballot. A majority on the seven-member council would have to agree in order to place the initiative before voters.
As a “general tax” that would not restrict how the revenue could be spent, the proposed increase would require approval from a simple majority of voters to pass, rather than from two-thirds of the electorate, according to City Hall. The two-thirds requirement applies to “special taxes” that limit the uses of revenue.
A poll of 500 registered Santa Monica voters in the past week found that 63 percent of respondents believed City Hall has “great” or “some additional” need for revenue to pay for services, according to a City Hall report.
Without being given detailed information about the proposed sales tax increase, 59 percent of those polled said they would support the measure. When additional information was presented, support for the tax hike was 64 percent, according to a City Hall report.
The poll, conducted by Fairbank Maslin Maullin Metz & Associates, was said to have a 4.4 percent margin of error.
City Hall staff is recommending the sales tax ballot initiative as a way to protect services as rising expenses, the recession and the state of California’s budget crisis have damaged Santa Monica’s financial outlook.
In the budget for this fiscal year, the City Council opted to spend $4.1 million in one-time funds and also cut spending and raised some fees to close a $13.2 million budget gap.
Finance Director Carol Swindel has estimated the budget gap could be as high as $53 million by 2015 unless officials make cuts to programs or find new sources of revenue.
In a report on the proposed tax increase released late Thursday, Kate Vernez, assistant to the city manager, said Sacramento has diverted more than $40 million out of City Hall’s budget in the past six years, including $21 million from Santa Monica’s Redevelopment Agency last fiscal year.
The report said one-quarter of the revenue generated by the tax increase would come from visitors and tourists.
Details of when the potential tax increase would take effect and how long it would stay in effect have not been disclosed.
If passed into law, the increase could boost Santa Monica’s sale tax rate to 10.25 percent, one of the highest rates in the state. A statewide 1 percent sales tax increase passed last year by the California legislature as a budget deficit reducing measure, though, is set to expire next July.
City Hall’s poll also assessed residents’ attitudes towards a possible ballot initiative to increase Santa Monica’s property transfer tax. That idea “did not poll particularly well,” according to the City Hall report, though no specific information about the results were included.