Pass: 22,399 / 82.23% Yes votes ...... 4,840 / 17.77% No votes

See Also: Index of all Measures

Fiscal Impact from Santa Cruz Finance Director:

The proposed increase in the City of Santa Cruz Transient Occupancy Tax, if approved by voters, will increase the existing rate by 1% (from 10% to 11%). Visitors pay this tax when they stay at any lodging facility (such as a Hotel, Motel or Vacation Rental property) for 30 days or less within the City. Therefore, the Tax appropriately places the financial burden of providing additional local support services, like streets and public safety, on the visitors whom drive this need.

The tax payments are collected from the visitors by the property "Operators" who then remit the amounts to the City. The collections are held in the General Fund to fund primary support services that include Police, Fire, Public Works, Parks & Recreation and economic development programs and services. If approved by the voters, the new tax structure would become effective July 1, 2013 with expected first collections received by the City in August 2013.

The tax increase will generate approximately $470,000 annually in new revenues for the City of Santa Cruz General Fund beginning with fiscal year 2013-2104. It is projected that the total tax will amount to approximately $5.17 million per year.

Revenues generated could be used by the City Council for any public purpose, but it is intended by the City Council that the tax revenues would be used to fund economic development programs, including activities that serve to retain and attract businesses and jobs to Santa Cruz. Economic development is one of the critical strategies relied upon by the City to offset its structural General Fund deficit (projected at $3.7 Million for 2012/13).

s/ Marc A Pimentel, Finance Director
City of Santa Cruz

Impartial Analysis from Santa Cruz City Attorney

Pursuant to Santa Cruz Municipal Code Chapter 3.28, since 1991 the City of Santa Cruz has levied a 10% transient occupancy tax on each hotel or motel guest in the City. This ballot measure, if approved by City voters, would increase the tax rate from 10% to 11% of the rent charged by the hotel or motel operator.

The transient occupancy tax constitutes a general tax meaning that all tax revenue is deposited in the City's General Fund and is available to pay for the costs of all City operations and programs including police and fire protection, parks and recreation programs, economic and employment development, and other essential City services. This ballot measure therefore proposes a "general purpose tax" rather than a "special purpose tax" and requires a simple majority vote for adoption.

While City voters will also be asked to vote on Santa Cruz County Ballot Measure N which proposes a County transient occupancy tax increase to an 11% tax rate, similar to that proposed by the City in this ballot measure, hotel/motel guests in the City would only be required to pay the City tax and hotel/motel guests in the unincorporated County would only be required to pay the County tax.

Since a substantial percentage of the City's hotel/motel guests are non-City residents who are tourists or City visitors, a substantial portion of the increased tax revenue generated by this initiative, if adopted by the voters, would be paid by non-City residents despite the fact that all such proceeds will underwrite the costs of providing municipal services to City residents.

The above statement is an impartial analysis of the proposed transient occupancy tax increase ordinance. If you desire a copy of the ordinance, please call the City Clerk's office at 831 420 5030 and a copy will be mailed or electronically transmitted to you at no cost to you.

s/ John G. Barisone
City Attorney

Election News for the City of Santa Cruz