Orange City Council can’t agree how long a proposed sales tax hike should last
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Financial frustrations festered this week between elected officials as the Orange City Council failed to put a sales tax increase on the ballot for a third meeting in a row.
Debate over the proposed 1% sales tax hike continued on Tuesday and hinged on the question of when the measure should sunset.
If passed by voters in November, it could bring an estimated $37 million to Orange’s cash-strapped general fund every year.
“We were clear that there was a consensus on [a term of] 10 years, but the city manager wasn’t exactly clear on that,” said Mayor Dan Slater. “We’ve narrowed it down to [continue] until ended by voters, 10 years or possibly 20 years. Those are the things on the line.”
Orange’s proposal to temporarily shelve several infrastructure projects for the next fiscal year comes as City Council members push for a sales tax ballot measure to avoid a projected bankruptcy.
City-hired consultants warned the council in July 2025 that Orange risked bankruptcy as soon as 2029 if officials did nothing to change course. The consultants suggested a 1% sales tax increase as a short-term solution to bolster revenues against expenses.
Orange’s current sales tax rate is 7.75%.
Voters in other Orange County cities have passed sales tax increases in recent years to better balance their budgets.
In 2018, Santa Ana voters approved a 1.5% sales tax hike for an initial 10 years, bringing the city’s rate to 9.25%, which is the highest in the county. Two years ago, Westminster voters boosted the city’s sales tax to the same rate but did not adopt a fixed term.
Orange councilmembers first discussed a sales tax ballot measure in April but sought to revisit the issue earlier this month.
At the May 12 meeting, the panel considered number of revenue-raising options, including a sales tax hike. City staff received direction to prepare documents for both the sales tax measure and a measure to raise current hotel bed taxes.
City staff left the term of the proposed sales tax hike blank with councilmembers tasked to fill it in on Tuesday with five votes needed in support.
How the ballot measure presented to voters is a sensitive and high-stakes issue. Facing budgetary woes before, Orange voters narrowly rejected Measure Z in 2024, which would have raised the sales tax by a half-percent for 10 years.
According to the Orange County Registrar of Voters, about 37% of registered voters in Orange are Democrat, closely followed by Republicans at 35% and independents at 22%.
Last month, Councilmember Jon Dumitru acknowledged that a vote to put a sales tax measure on the ballot in an election year would amount to “political suicide” for some of his colleagues on the dais.
This time around, Dumitru supported Councilmember Arianna Barrios, who favored a term that voters would decide to end. Slater countered with a fixed 10-year term, a move that garnered support from Councilmember Kathy Tavoularis.
“All of us intimately know that councils can get … lackadaisical,” Tavoularis said. “The reason I want 10 years is it keeps future councils’ feet to the fire. I can’t vote for a 20-year tax increase.”
Both motions failed to get the supermajority vote needed on the seven-member council to proceed.
Councilmember Ana Gutierrez sought to find a middle ground and floated a 15-year term to Tavoularis as a compromise.
“We live in a small ‘c’ conservative community where, right now, the economy … it’s hard for people to do this,” Tavoularis countered. “Putting a 15-year [sales tax increase] on our residents is a little burdensome at this time— not that I don’t think we need the money. I definitely think we need the money.”
Without a clear path forward, Dumitru asked when the city would have to make a bankruptcy declaration. City Manager Jarad Hildenbrand said Orange isn’t at that point yet, but has until July 14 to put a sales tax measure on the November ballot.
“I’m very confused by the fact that everybody agrees that, for the last year or two years, we’re struggling,” Dumitru said. “We can’t pay to keep police officers. We’re going to have trouble starting to fund our fire department, but we’re back at indecision and inaction.”
Hoping to break the impasse, he asked colleagues to support a 1% sales tax increase for a 12-year term.
Sean Crumby sent an email to city staffers on Monday announcing his pending retirement on Aug. 14. His decision comes amid projected budget deficits.
Before debate could get going, Tavoularis took issue with Dumitru’s criticism of the council.
“We’ve been talking for months about different things I’ve offered [and] different things you’ve offered,” she said. “It’s unfair to say that people don’t want to see things because we don’t see it your way. That’s really unfair when you’re trying to get people on the same page.”
Barrios admonished Dumitru about talking over Tavoularis.
“You’re afraid,” he told Tavoularis under his breath.
“I’m not afraid,” she said.
Dumitru asked Tavoularis about a 12-year term.
“I think I want to table this motion right now,” she said.
Before that happened, Dumitru’s motion for a 12-year term fell one vote shy of the supermajority needed. Sensing the frustration mounting, councilmembers tabled the sales tax ballot measure until their next meeting.
