Following a misguided trend with Orange County cities, on Nov. 5 city of Orange voters will have to consider Measure Z, a 0.5 cent sales tax increase. It would raise $19 million annually, even though the budget deficit for fiscal 2024-25 is only $7 million. The current tax is 7.75%, the lowest allowed for OC cities and the level in neighboring Anaheim, Tustin and Irvine. If approved, the new sales tax rate in Orange would be 8.25%.
In response to criticism that the tax hike would push consumers to cities with lower taxes, city officials are considering engaging in crony capitalism to fend off opposition to the measure. At their Oct. 8 meeting the council voted 6-1, reported VoiceofOC, "for staff to come back with a study examining the impacts of a $300 car rebate," at a cost of $1.5 million, should Measure Z pass to encourage city residents to keep buying their cars in the city.
Councilman John Gyllenhammer, who voted against the proposal, argued, "I think this is here because there's the specter of an increased sales tax. We are picking an industry that we want to subsidize and that is something we have to decide if that's what we want to do."
By proposing to subsidize car purchases in the city, what city officials have implicitly acknowledged is that there are negative economic consequences to raising taxes. Low- and middle-income residents will be hit the hardest, as they get nickel-and-dimed to paper over the failure of city officials to spend within their means.
The real problem is that the city is badly managed. According to the city's Annual Comprehensive Financial Report for the fiscal year ending June 30, 2023, the latest available report, "The governmental activities' expenses ended the 2023 fiscal year at $194 million, an increase of $32.9 million or 17% compared to the prior year." How many Orange residents got a 17% raise?
Finally, the summary voters see claims the tax is for "maintaining 911 response, fire/ police protection/paramedic services; recruiting/retaining well-trained police/firefighters," etc. This language is pretty typical for sales tax measures up and down the state because the language is consultant-crafted to trick voters into thinking the higher taxes would go toward those specific things. Actually, the higher taxes would go into the general fund and could be spent however the council wants.
Vote No on Measure Z and reject crony capitalism in the city of Orange.