Santa Cruz County supervisors heard a range of potential funding options June 30 for addressing the county’s growing road maintenance needs, including possible sales taxes, parcel taxes, special assessment districts and development fees, as officials try to figure out how to pay for road repairs now and in the future.
After the supervisors were given a presentation from the County Executive Office outlining possible revenue strategies, the Board then directed staff to complete a transportation funding and financing analysis and return in January with some answers.
“I’m glad we’re moving on this,” said District 1 Supervisor Manu Koenig. “We probably should have started moving a lot sooner.”
The county faces a significant gap between available funding and the cost of maintaining the county’s road network. The county’s 2025 Pavement Management Program estimates it would cost about $29.5 million annually to maintain roads at an average Pavement Condition Index score of 57. The score measures cracks and splits on the road, surface damage and ride smoothness. A score of 85-100 is good, 55-84 is fair and a score of under 55 means the road has heavy damage, deep holes and requires a rebuild.
Currently, Santa Cruz County roads average a mere 57.8, but the county projects the average pavement condition could decline to about 36 by fiscal year 2034-35 and deferred maintenance costs could grow from about $294 million to about $683 million if corrections aren’t made. Currently, the annual budget only allows about $6.3 million for repairs, leaving a gap of roughly $21 million.
Without additional funding, the county projects the average pavement condition could decline from its current level of about 57.8 to approximately 36 by fiscal year 2034-35, while deferred maintenance costs could grow from about $294 million to about $683 million.
Ryan Friedrich, principal analyst in the County CEO’s office, said two issues are growing the backlog. “First is inflation, cost, and the second is deterioration of the roads,” he said. “It’s about half each.”
Friedrich went through a variety of options to address the deficit, starting with development impact fees. Increasing those would be easy, he said, because it doesn’t require a public vote. However, he pointed out, using that money requires a nexus to new development.
“So it doesn’t help our deferred backlog, but it does relieve pressure on current funding sources that are being used for things like capital improvement matches,” he said, but estimated the county could get about $5 million more annually with an increase.
Friedrich also discussed assessment districts, community facility districts, and other ideas that would all require voter approval. One option discussed was a dedicated local sales tax. A half-cent sales tax in the county’s unincorporated areas could generate an estimated $10.7 million annually, according to preliminary estimates. However, because the tax would be dedicated to transportation purposes, it would require approval from two-thirds of voters.
Friedrich also noted that unincorporated Santa Cruz County is already at the state limit for local sales tax increases and additional authority from the Legislature would be needed before a new sales tax could be implemented.
Another potential option is a parcel tax, which could generate an estimated $9.2 million annually based on a preliminary model of about $200 per improved parcel and $100 per unimproved parcel.
Unlike a sales tax, a parcel tax would be paid by property owners rather than consumers and could provide a more stable source of transportation funding. It also would require voter approval.
“There’s a lot of different tools at the county’s disposal to look at augmenting current transportation funding,” Friedrich said.
No new revenue source was recommended in the report. Staff said the upcoming consultant analysis will evaluate potential revenue yields, approval requirements, implementation timelines and community impacts before returning to the board.
TOP PHOTO: Valencia Road is one of many roads in the county in need of repair.