Round Two in Goleta’s Attempt to Shake Off Revenue Yoke

“It was a very cordial meeting,” said Mike Jenkins of Goleta’s first foray on Thursday into discussions with the county about the tax-sharing agreement they agreed to when the city formed in 2002.

At stake is the roughly $7 million Goleta has given to the county on average out of its annual share of property and sales tax. The Revenue Neutrality Agreement was meant to compensate the county for tax losses when Goleta became its own entity, sliced out of formerly county lands, but Jenkins, the city’s attorney, said in an earlier interview that roads were a good way to understand the inequity that has developed since 2002.

As in all city incorporations in California, Goleta took over the care and maintenance of its roads from the county. Residential and hotel growth since 2002 has exploded within the city borders and also near the UC Santa Barbara campus population. The big-box stores in Goleta only became more dominant along the South Coast as smaller retail stores have dwindled. All that added to more traffic on Goleta’s roads, which they were not built to handle, Jenkins said.

“At the council meeting last week, the talk was all about roads and capital improvement projects. It will take $60 million to fix everything the way they ought to be fixed,” Jenkins said. “The amount of sharing in the RNA was beyond the parties’ expectations. And the costs of running the city and taking care of city infrastructure were not sufficiently anticipated at that time.” He said traffic had increased dramatically over 18 years, but Goleta got no money from the county to deal with roads.

The 30 percent of Goleta’s sales tax and the 50 percent of its property tax that goes to the county in perpetuity is simply too much, Goleta argues. Its letter to the county in October asking for negotiations suggested ratcheting back the amounts over several years.

County CEO Mona Miyasato is the keeper of the books, and she noted the county had updated its information on services to Goleta and their costs.

“As you know, the RNA was designed to mitigate a revenue gap to the county and its residents caused by incorporation,” she wrote in an email. “However, the current revenue is still not adequate to cover the cost of providing county services to Goleta. Even with the tax-sharing terms, the county incurs a loss each year.”

Miyasato said the most recent year’s county services for Goleta totaled $13.8 million. The revenue received was $10.9 million. The county subsidized the city with $2.9 million, she said. Fire services for the city alone, Miyasato noted, had to be beefed up with $2.8 million from the county.

Ironically, among the services the county provides to Goleta are property tax assessment support and tax collection and disbursement; the proportion of those and the sales taxes given to the county are at the center of the city’s contentions. The county also provides public protection and criminal justice support, such as the District Attorney and Public Defender offices, courts, jails, reentry programs, and Probation, Miyasato wrote, as well as augmented fire services and services such as Public Health, mental health, social services, and elections.

Goleta’s October letter requested more details on those items as well as revenue and expenditure information from the county budget and financial reports since 2001. Jenkins said another meeting would be set after the additional information was provided.

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