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Wednesday, April 8, 2020

Santa Maria warns of impact to safety services with projected tax revenue losses

Posted By on Wed, Apr 8, 2020 at 1:51 PM

With more than half of its own hourly workers furloughed, the city of Santa Maria is expecting to lose about $3 million of anticipated sales tax revenue—including a little less than $2 million of Measure U revenue—as a result of the COVID-19 pandemic.

Mark van de Kamp, the city’s public information manager, said this projected loss is a result of industries struggling “across the board.”

“Hotels are seeing a real impact. Restaurants, under the health order, they’re not allowed to serve in house meals any longer. They must be to-go or curbside or delivery. It could impact automotive sales,” he said. “There’s a number of small businesses that have closed. Businesses of all sizes are definitely feeling the hardship and we really feel for them.”

Gov. Gavin Newsom’s April 2 announcement allowing the deferral of sales tax payments to local jurisdictions is a step toward financial relief for these affected industries. However, van de Kamp pointed out that the sales tax resources targeted for deferral—particularly those that support Measure U—are a major source of funding for the city’s safety services.

“Ninety percent of every dollar in Measure U revenue goes to police and fire,” van de Kamp said. “The remaining 10 percent is split between quality of life and youth services. So, the lion’s share goes to public safety.”

click to enlarge SAFETY FIRST The city of Santa Maria expects to take a large hit from loss of tax revenue associated with COVID-19 closures and tax deferrals. Safety services, such as the city’s fire department, might see the greatest impact. - FILE PHOTO BY JOE PAYNE
  • FILE PHOTO BY JOE PAYNE
  • SAFETY FIRST The city of Santa Maria expects to take a large hit from loss of tax revenue associated with COVID-19 closures and tax deferrals. Safety services, such as the city’s fire department, might see the greatest impact.
Van de Kamp said that the city had expected to receive $22.8 million in regular sales taxes, and $19.3 million in Measure U sales taxes, a total projection of $42.1 million. With COVID-19 related losses, the city is now looking at just $21.4 million dollars in regular sales tax revenue, and $17.5 million in Measure U revenue.

“We drop from roughly $42 million to $39 million,” van de Kamp said. “That’s about 7.3 percent less than budgeted.”

It will be up to the City Council to decide exactly how the budgetary loss will be distributed. But with public safety getting a majority of the Measure U funds, “it’s going to feel the impact,” van de Kamp said.



He added that the city and local businesses are going to need government intervention to make it through the pandemic. “We’ve been in discussions with our representatives to find relief,” he said. “The suddenness of this plunge in revenues is so fast and so deep, that the way to get through this is the state Legislature and the federal government might be able to provide us some relief.”

The city has been in discussions with U.S. Rep. Salud Carbajal (D-Santa Barbara), state Sen. Hannah-Beth Jackson (D-Santa Barbara), and Assemblymembers Monique Limón (D-Santa Barbara) and Jordan Cunningham (R-San Luis Obispo) to work toward relief for the city and local businesses, van de Kamp said. The city also has a lobbyist in Washington D.C. who is fighting for federal assistance.

“Sales tax is the lifeblood of our budget,” van de Kamp said. “The effect of a downturn is felt pretty quickly, and that’s certainly true now.”
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