On the March 3 ballot, the city of Scotts Valley is asking voters to increase the city sales tax to 1.25 percent and extend it for 12 years. Measure Z is designed to replace Measure U, a half-cent sales tax that was approved in 2013 with 75 percent support and expires in March 2022.
Developer Corbett Wright has started construction on a new gathering spot called The Hangar, which will be behind the drive-through Starbucks on Mount Hermon Road in Scotts Valley.
The state sales tax rate is 6 percent and the Santa Cruz County sales tax rate is 2.5 percent so if voters approve Measure Z, the overall sales tax rate will increase from 9 percent to 9.75 percent in Scotts Valley.
The measure is projected to raise $1 million in the current fiscal year and $2.5 million by fiscal 2023-24.
“We’ve done our level best to decrease expenditures,” said Mayor Randy Johnson. “We’ve reduced staff by over 20 percent, from 70 to 52 people. Salaries have been flat. Employees are picking up more of their pension costs. We share a building official with Capitola to save money.”
He added, “Taxpayers get upset if there’s a spending problem. This is really a revenue problem … Measure Z does not add new programs. We’re hopeful voters will support it.”
No one filed an argument against the tax measure.
Capt. John Wilson confers with Capt. Mike Dean at the Scotts Valley Police Department.
Six weeks ago, the City Council unanimously declared a fiscal emergency, citing an annual deficit of $1 million on the General Fund budget of $13 million. The city is balancing the budget with reserves, which will eventually be tapped out.
Without more revenue, “the city would be forced to make very significant cuts,” Johnson said, explaining that the police department with about 20 officers accounts for 45-48 percent of the budget.
“Over the past year or two, we’re losing eight officers,” Johnson said, citing pay “over the hill” that is 100 percent higher and signing bonuses of $25,000 offered by the Santa Cruz County Sheriff’s Office.
Sales taxes make up 30 percent of city revenues, hotel room taxes, 19 percent and property taxes 13 percent, with the rest coming from fees, fines, citations and grants.
Johnson said room tax revenues are up because of the new Four Points Sheraton, which was a long time under construction, and 1440 Multiversity, which converted the former Bethany University campus into “a destination point — it’s doing very well.”
Kmart is closing in Scotts Valley, which for the city means losing a source of sales tax revenue.
A hotel approved several years ago to be built near the Enterprise Technology Centre may be emerging from dormancy, he added.
Meanwhile, Kmart, a chain retailer providing significant sales tax revenue, is planning to close and the city deficit is projected to grow.
As for other developments, Johnson said the council’s subcommittee is meeting with developers on the Town Center envisioned for Mount Hermon Road but he noted the city of Santa Cruz controls about half the land, a sticking point, and any project “has to be in step with the community’s desire.”
Mark Robson of Robson Homes is talking with neighbors about building homes on Mount Hermon Road at the shuttered Valley Gardens Golf Course, which is zoned for recreation and would require a zone change.
Corbett Wright, who built the drive-through Starbucks on Mount Hermon Road, is starting to build The Hangar, a new gathering spot, behind it.
The owner of the Aviza commercial property next to Skypark are requesting rezoning for housing and that’s expected to go to the City Council in late March or April.
Story and Photos By Jondi Gumz