Finance committee receives Q2 financial update: sales tax soft, hotel tax rising; downtown parking shortfall noted

Santa Barbara City finance staff presented the city’s second‑quarter financial review to the Finance Committee and reported that property tax receipts are tracking to budget while sales tax is softer and transient occupancy tax (TOT) is stronger than a year earlier. Staff also flagged a projected $3.3 million surplus for fiscal 2026 that does not yet account for anticipated costs from a forthcoming class‑and‑comp study or any council decision to transfer money to a local housing trust fund.

The presentation, led by finance staff, summarized general fund tax revenue and department spending through Dec. 31, 2024. “We will, of course, monitor this, as the fiscal year continues and adjust accordingly going forward,” the presenter said when describing revenue and expenditure trends.

Why it matters: the midyear review sets expectations heading into the spring budget cycle. The staff projection that sales tax growth has stalled and Measure I (a new sales tax rate that takes effect April 1) will only contribute three months of revenue to FY2025 could affect how many capital projects and programs the council chooses to appropriate next year.

Key revenue and program highlights

- Property tax: staff said property tax — the city’s largest general fund revenue source — is projected to come in near budget at about $51,000,000.

- Sales tax and Measure C: sales tax and Measure C receipts have been essentially flat quarter to quarter over the past six quarters and are projected to come in below budget. Staff said Measure C currently has no dedicated reserve; however, they do not have immediate cash‑flow concerns because capital projects are appropriated and paid over time. Staff warned continued softening…