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Santa Barbara finance committee flags widening budget gap, advances revenue options including transfer tax
Summary
City staff told the Finance Committee the general fund faces a structural deficit that could exhaust reserves by FY2028 and recommended a package of midyear adjustments and revenue options—including a property transfer tax, temporary fee increases and targeted cannabis-tax changes—to help close the gap.
Santa Barbara City Finance Director Kate De Martini told the committee on Feb. 24 that the city’s general fund faces a widening structural deficit and that, without action, staff projects reserves could be exhausted by the end of fiscal year 2028.
De Martini presented six-month actuals through Dec. 2025 and a midyear review showing expenditures rising faster than revenues, driven by higher wages, benefits and insurance costs for roughly 400 city facilities. The presentation recommended receiving the midyear report, adopting resolutions to adjust appropriations, and approving proposed modifications to the city’s salary-control resolution for certain authorized positions.
Staff walked members through department-level performance. Police…
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