The La Palma City Council voted unanimously on July 5 to place a 1-cent sales tax increase on the November ballot, becoming the second Orange County city to do so.
The Westminster City Council voted on June 23 to place its own 1-cent sales tax hike on the November ballot.
According to the Orange County Register:
If approved, the tax would take effect in April and generate an estimated $1.5 million annually for the community, which is struggling financially.
The city has cut its spending by $1.77 million the past several years, but was hampered when one major business left town and another changed to nonprofit status.
The city, which faces a projected $772,000 budget deficit in fiscal year 2016-17, has been dipping into its reserves the past several budget cycles to cover expenditures.
If more revenue doesn’t come in, officials say La Palma will have less than $500,000 in its savings account by 2025-26.
“We can’t cut our way out of this,” Mayor Gerard Goedhart said. “… This is an extremely important point in this city’s history.”
La Palma had considered several options for increasing revenues, including a parcel tax, a Utility Users Tax (UUT) increase, a Transient Occupancy Tax increase, and a Transaction and Use tax (sales tax) increase. The last option has, politically speaking, of passing muster with the voters.
The Fountain Valley City Council is also expected to place a sales tax increase in the November ballot.