Santa Barbara County is being squeezed financially, with increased costs outpacing revenue growth. A simple solution would be to raise the county’s sales tax, but county officials say research shows voters wouldn’t support it.
But, what if you could raise taxes without county residents having to pay them?
The county is looking at raising its transient occupancy tax. That’s the tax visitors pay on motel and hotel rooms, and for short term rentals.
"The county is seeking revenue options to diversify our resources given our future economic restraints, and as you may recall, a sales tax increase isn't a viable option at this time," said Nancy Anderson, who is Santa Barbara County’s Chief Assistant Executive Officer.
She said the county has been able to hold the line on its budget, but the next few years could be rough.
"Over the next three years, the county is projected to be at a nearly eight million dollar deficit, as a result of growing expenses that are simply outpacing the resources."
So, the idea being looked at is raising the county’s transient occupancy tax. The proposal calls for taking the current 12% tax to 14%, boosting revenue from around $17 million to more than #20 million annually.
If adopted, it would apply to 24 hotels and motels in unincorporated parts of the county, as well as 520 short term rental properties. Cities have their own transient occupancy taxes, which are from 6% to 12%. Solvang and Buellton are also looking at going from 12% to 14%.
Santa Barbara County Supervisor Steve Lavagnino says it could be a way to help keep the county’s program, and services on track.
"I really want to continue to invest in this community, to make it the place that people want to be drawn to," said the county supervisor. "And unfortunately, that does cost money."
But, the hotel and motel industry isn’t keen on the tax hike, even if it applies to out of town visitors. Kathy Janega-Dykes is President and CEO of Visit Santa Barbara, one of the county’s tourism trade groups.
"Raising the tax rate is not the way to achieve this shared goal. The wise and sustainable policy is by making the region more competitive, and more attractive, and attracting more overnight visitors."
Some hotel and motel operators fear the added cost could push visitors to other areas with lower costs.
At a Santa Barbara County Board of Supervisors hearing on the proposal, others said it would bring in money to help with major community issues like homelessness, and affordable housing.
County Supervisors voted 4-1 to have the staff draw up a draft ordinance. They are expected to look at, and perhaps make a decision on the proposal at their June 25 meeting.
