55C - RESO SALES AND USE TAX MEASURE

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Proposed Add on Sales and Use Tax Measure for Municipal Services for Public Consideration on the November 2018 Ballot July 3, 2018 Page 4 Consumer Response to Add On Sales and Use Tax Consumers spending patterns are generally not impacted by local sales tax rates. Staff conducted a survey of the Orange County cities that have a local add on sales and use tax and validated that passage of add on sales tax measures has not led to a decline in sales tax revenue. Additionally, when the tax revenue addresses city needs such as homelessness, public safety, quality of life and infrastructure, consumers do not comparison shop for sales tax rates. If the Santa Ana Neighborhood Safety and Essential City Services Protection Measure is approved, staff anticipates launching an enhanced Shop Local campaign with an emphasis on the benefits of local purchases on the economy and the services consumers will receive as a result of keeping their spending within the City of Santa Ana. Revenue Estimates The City Council, at the June 19, 2018, Council meeting, requested estimates on the anticipated revenue that may be generated at various add on sales and use tax increments. The chart below outlines general estimates, which represent a full year of revenue, for consideration: Increment Annual Est. 1 '% cent $60 million 1 cent $40 million * cent $30 million * cent $20 million State law establishes regulations on add on sales and use tax measures and the increments that are allowed to be considered, in this case, the City Council may consider a ballot measure in increments of one quarter cent. The maximum sales tax rate allowed is 10.25% in the state. Staff recommends a penny and a half add on sales and use tax measure which provides the greatest opportunity to address community needs while addressing the City's long-term financial stability. The proposed measure, if approved, would be a full percent below the ceiling established by the State. Based on the majority approval of the add on sales and use tax measure by the Santa Ana voters in November of 2018, it is anticipated that the additional new revenue would commence in the spring of 2019. Programs and Services the New Revenue will Fund If the Santa Ana Neighborhood Safety and Essential City Services Protection Measure is approved by the voters, new revenues generated will go to providing public safety, addressing homelessness, providing deferred maintenance at parks and other City facilities, equipment replacement, capital improvements, youth programming, library services, code enforcement and general municipal services. Additionally, the new add on sales tax revenue will support city needs and priorities as identified in the May 1, 2018, City Council Meeting 2018-19 Trial Budget Presentation. This included funding for 55C-4