Santa Cruz supervisors refer $1.5M base expenditure-limit increase to November ballot amid audit concerns and animal-shelter pleas

The Santa Cruz County Board of Supervisors voted unanimously on July 8, 2026 to refer Resolution No. 2026-17 to the Nov. 3 general election, asking voters to increase the county's 1979–80 base expenditure limit by $1.5 million. The board and staff emphasized the measure would expand spending capacity if approved, but would not create new taxes or raise tax rates.

During a lengthy public hearing, county finance staff described the technical formula that sets the state's expenditure limit, explained which revenues count against it, and recommended the $1.5 million base adjustment as a conservative, 15–20 year solution to an anticipated funding gap. "Adding the $1,500,000' to that base with the same population and inflation factors would add almost $20,000,000 of spending capacity," said Mauricio Chavez, the county finance presenter. Chavez reiterated that the change "is not a tax increase" and that any actual spending would still require annual budget approval and public hearings.

The hearing was dominated by two linked concerns: the county's overdue audited financial statements and urgent needs at the animal-control shelter. Several residents cited an Arizona Auditor General public notice that certain audits were removed from distribution; Wendy Eastlas told the board the Auditor General had posted that the county's comprehensive financial reports "have been removed by the auditor general" and that the listed reports "shall not be relied upon." She asked whether the county had revised or reissued statements and urged the board to pause the ballot referral until outstanding audits and financial statements are complete.

County staff told the board they are cooperating with Walker & Armstrong, the independent firm the Auditor General's office assigned after a conflict of interest required a reassignment. Chavez said the FY24 audit is on track to be completed on or before Aug. 31, 2026 and that work on the FY25 audit is anticipated to finish by March 31, 2027. "These audits are behind schedule," Chavez said, and added that the delays followed the discovery of a 2024 embezzlement that required reconstructing records and triggered additional audit procedures.

Speakers who supported placing the measure on the ballot framed it as a pragmatic step to avoid future penalties or constraints on spending flexibility. Opponents and several speakers urged greater caution and more transparency: Alejandro Castaneda asked the board to postpone action until overdue audited statements and the county's long-term financial model were made public; Bruce Bracker called a 15–20 year projection an "overreach" and suggested a shorter horizon.

A large portion of public comment centered on animal control. Volunteers and residents described facility and staffing shortfalls after the Humane Society's closure and urged the board to prioritize a new or upgraded shelter. Taylor Holquist and other rescue volunteers described the current facility's limited kennel and isolation capacity and asked that any new project include quarantine and weekend adoption hours. Staff said a design exists for a new facility but that funding is not currently available; they estimated that increased industry revenues could make a project feasible around FY29 and noted the city of Nogales already pays roughly 50% of animal-control costs under an IGA.

Board members pressed staff on communications and oversight. Several supervisors supported adding a standing monthly agenda item to report audit progress to the public. Chair Fanning and other board members emphasized that approving the resolution only sends the proposed base adjustment to the ballot; it would take a voter majority to change the county's base and the new base would take effect the following fiscal year if approved.

After public comment and discussion, a supervisor moved to approve Resolution No. 2026-17 to refer the $1.5 million base adjustment to the ballot. The motion carried unanimously. The board also agreed to increase public communication about audit status and said staff would continue to provide updates as audits progress.

What happens next: the resolution places the proposed base adjustment on the Nov. 3, 2026 ballot; if voters approve it the new base will be incorporated into the state's formula and take effect in fiscal year 2028. The county continues to work with Walker & Armstrong and the Auditor General's office on outstanding audit reports, which county staff said they expect to complete by the dates cited above.