It’s always news to elected officials, but the economy goes up and down — and it’s their job to create sufficient reserves, control government salaries and manage their budgets in a way that assures quality services and reasonable tax rates. To quote former Gov. Jerry Brown as he proposed his final state budget: “What’s out there is darkness, uncertainty, decline and recession. So good luck, baby.” It’s darker than usual these days.
The Newsom administration is wrestling with an $18-billion deficit — a far cry from the $97.5-billion surplus that state officials squandered only four years ago. And local officials, even in supposedly conservative Orange County, should have been paying attention to the economic news. They now expect taxpayers to pay more to paper over their fiscal nonchalance. They are threatening service cuts if voters don’t comply.
In 2024, voters in three OC cities (Buena Park, La Habra and Seal Beach) approved a sale-tax increase. Orange voters said no that election, but the city has since hired consultants who concluded that it could face bankruptcy within three years. So expect that tax-hike idea to come back eventually.
This year, other cities are turning to the tax-hike playbook. Voters in Fullerton rejected a 1.25% sales-tax hike in 2020, but are considering two measures for November: a 0.5% hike for public safety and another 0.5% for roads.
Costa Mesa City Council also directed staff to explore two ballot measures to boost hotel taxes and business-license fees. Current tax rates lag behind neighboring cities, but we’re tired of this one-way ratchet where cities constantly increase taxes and fees and then other cities follow suit. Local governments should compete on their business-friendly, low-tax climates — not worry about whether they are keeping up with the higher-tax Joneses.
It wasn’t long ago that OC cities scurried to spend federal COVID dollars. They should have planned ahead. Cities should also remember Brown’s warning that recessions always are around the corner — and get their spending on a sustainable path before hitting up taxpayers for more cash every time they run into trouble.