Santa Cruz’s sunny beaches, rocky coast, breathtaking redwoods, and notorious Boardwalk have made the city into a desirable tourist destination. Attracting more than three million visitors annually, tourism employs nearly 8,000 people countywide and brings millions of dollars in revenue to the city.
But at the start of the pandemic, hotels remained unoccupied, businesses struggled to make ends meet, and the city lost one of its main streams of income. To cope with this financial loss, the City Council has proposed an initiative, Measure P, to increase taxes on transient occupants in hotels and short-term rentals.
“We have to invest in our city, our city infrastructure or city employees, […] our parks and roads,” said Mayor Sonja Brunner. “In order to do that, you need revenue, and we lost revenue [during the pandemic].”
On Nov. 8, voters will determine whether the City of Santa Cruz’s Transient Occupancy Tax (TOT) should be increased or remain unchanged. The tax includes how much tourists and other visitors who are staying overnight at hotels pay for lodging and its facilities.
If passed, the TOT will rise from 11 percent to 12 percent for traditional lodgings, like hotels. For short-term rentals like Airbnb and VRBO, which are rented for fewer than 30 days, the tax will increase from 11 to 14 percent.
Although Measure P has no filed opposition, Keith McHenry, founder of Food Not Bombs and advocate for the local unhoused community, raised concerns regarding the measure at a City Council meeting in August. He fears the heightened taxes that the measure would instill may prevent many unhoused people from accessing local hotels, which they rely on for resources, such as showers, whenever possible.
Despite how the measure might impact Santa Cruz’s unhoused community, it would have alternative reverberating benefits. It’s estimated that Measure P would bring an additional $1.4 million in revenue annually. The city cannot legally earmark this revenue to any specific service. However, the City has identified several infrastructural priorities such as maintaining local roads, investing in affordable housing, reducing wildfire risk, creating solutions to houselessness, and supporting the local police and fire departments.
Council Member Sandy Brown, who has been focused on creating sustainable economic development through Measure P, has been vocal about putting the revenue towards workers’ wages.
“We have workers who are getting, really, really underpaid for the jobs they do relative to other public agencies, and people who work in those same positions in other public agencies get paid a lot more,” Brown said.
Measure P needs a simple majority vote to be implemented. If passed, the additional tax will be implemented on Jan. 1, 2023.
As tourists slowly return to Santa Cruz, Brunner remains hopeful that the taxes implemented through Measure P will boost the city economy without deterring tourists.
“It’s important to understand that we are impacted by tourists,” Mayor Brunner said. “One of the broad statements in the argument for Measure P was that this is a measure that tourists would also pay their fair share of our city services.”
