SANTA MONICA — The Santa Monica City Council unanimously voted on July 28 to adopt a resolution placing a measure on the November 3 general election ballot that would increase the local sales tax on properties over $5 million.
The proposed tax would raise the Santa Monica property sales tax from $3 of tax per $1,000 of property value to $6 per $1,000. A staff report reads, “an incremental tax increase on real estate transfers of $5 million or more… would provide new ongoing revenue. Funds would assist the General Fund in preserving and restoring key foundational services.”
A City Council report cites how the economic impact of COVID-19 on Santa Monica is requiring the city to create new revenue streams in order to provide and “protect Santa Monica’s foundational services into the future.” Since the beginning of COVID-19 quarantines, sales tax, transient occupancy tax, parking revenue, and business license revenue have all decreased significantly.
The council report continues, detailing how the lack in these funds will, “erode the progress that the City has made over time in meeting community needs, including continued progress in addressing homelessness, rental and food assistance programs, maintaining fast 911 emergency response times, providing services for youth and seniors, economic recovery efforts, including helping local businesses re-open safely, and keeping beaches and other public spaces clean and safe.”
Prior to the economic impact of COVID-19, the Santa Monica council was already looking at new revenue streams to fund the aforementioned services. The council cited “geopolitical shifts” reducing tourism, a preference for online shopping, and commuter behavior changes that decreased parking revenues, as the main reasons for decreased revenues.
The proposed tax increase on real estate sales or transfers over $5 million would fund a number of Santa Monica programs and services. The tax revenue acquired from these sales, estimated to be 10% of the property sales each year, would keep beaches, parks, and beach restrooms clean and safe. Staff believes the revenue accumulated by the measure would be around $3 million, potentially doubling in the next five years.
The funds would also be used for homelessness prevention and reduction services, after school and mental health youth programs, restore city maintenance programs, and re-open neighborhood libraries, among others.
At the July 28 City Council meeting, Mayor McKeown agreed to write an argument in favor of the ballot measure.
Ultimately, the voters will have the decision to approve the ballot measure at the November 3 general election.