Fiscal Impact Statement for Measure Z

Tony McFarlane, Administrative Services Director

Measure Z, if approved by voters, authorizes the City of Scotts Valley to eliminate the existing temporary 0.50% sales tax and replace it with a temporary 1.25% sales tax for twelve years.

Proceeds from this tax would be deposited into the General Fund and would be used to fund general city services such as local 9-1-1 dispatch, police, emergency preparedness, park maintenance, and street and storm drain repair.  

Revenues generated by the sales tax will help stabilize the City’s budget and avoid reductions to core city services, such as local 9-1-1 dispatch, police, park maintenance, and street and storm drain repair.  The new revenues will also help reduce the City’s General Fund structural deficit, which is projected to be $1 million for Fiscal Year 2019/20 and anticipated to increase to $2.5 million by Fiscal Year 2022/23 and $5.8 million by Fiscal Year 2023/24.  

The sales tax rate for the City of Scotts Valley is currently 9.00%. Of that, the city currently receives 1.50%. If the ballot measure is adopted, the sales tax rate would increase to 9.75% and 2.25% of that would go to the city beginning July 1, 2020, and ending June 30, 2032.  If approved, the temporary sales tax will generate approximately $3.3 million per year in revenue for the General Fund of the City of Scotts Valley beginning with Fiscal Year 2020/2021.

The projected revenues are based upon analysis of historic sales tax revenues.