Board of Supervisors approve Transient Occupancy Tax increase ballot measure

File photo by Jayson Mellom
TWO PERCENT: Hotels, motels and short-term rentals in the unincorporated parts of Santa Barbara County, like the Skyview Los Alamos hotel, may see an increase in transient occupancy tax if voters approve the 2 percent increase during the November 2024 general election.

Despite some residents’ concerns about increased taxes, impacts to the tourism industry, and multiple tax measures going before voters, the Santa Barbara County Board of Supervisors voted 4-1 (with 4th District Supervisor Bob Nelson Dissenting) to put a Transient Occupancy Tax increase on the November 2024 general election ballot. 

“I really want to continue to invest in this community to make it the place people are drawn to, and unfortunately that does cost money,” 5th District Supervisor Steve Lavagnino said. “I apologize for the timing, but we are on a path where sales tax would provide the necessary funding.” 

Transient occupancy tax (TOT) is a tax generated by visitors who pay the rate when staying at hotels, motels, or short-term rental properties for 30 days or less within the unincorporated areas of the county—which have 24 hotels and 520 short-term rentals, according to the staff report. Voters approved the county’s current 12 percent TOT during the November 2016 general election—a 2 percent increase from the previous 10 percent rate, which had been held since 1990.  

Now the county is proposing an additional 2 percent increase (14 percent)—which would bring Santa Barbara County to the same rates as Beverly Hills, Los Angeles, Oakland, and San Francisco—in order to help the county generate more discretionary revenue, according to the staff report. Solvang and Buellton will also be proposing a 2 percent TOT increase to bring their rates to 14 percent, and Carpinteria is proposing an increase to bring its TOT to 15 percent. 

After the board’s approval, staff will come back with ballot language on July 9. While the TOT only applies to hotels in the unincorporated areas, the measure will need a simple majority of all county voters, according to the staff report. 

“Because it’s on a TOT, it’s general, discretionary revenue, it could be spent anywhere in the county, not just the unincorporated area,” CEO Mona Miyasato told the supervisors. 

During the April budget workshops, staff reported that the county is facing budget revenue growth outpaced by increased salaries, employee benefits, and internal services along with continued storm recovery costs; new legislative changes for public safety, health, and behavioral health services; and ongoing litigation, according to the staff report. The 2 percent increase to TOT presents an estimated $2.9 million increase in revenue, totaling $20.6 million. 

While the additional funds would help, Supervisor Nelson voted against adding the measure because he believes that there are other avenues the county could go down in order to generate revenue, he said. 

 “Looking at … all of the services we have to offer and limited discretionary funds the county has, it is daunting, and I don’t disagree that there’s a problem where there are more needs and wants than there are resources, I just disagree with the solution,” Nelson said. “More taxes doesn’t necessarily mean more revenue.” 

According to a letter signed by 109 regional business leaders, this increase would make the county’s TOT the most expensive on the Central Coast, with Ventura County at 8 percent, SLO County at 9 percent, and Monterey County at 10.5 percent, putting Santa Barbara County at a competitive disadvantage. 

“I know there’s some that think 2 percent is not that bad, … but the message I’ve gotten from the business community is they are concerned, especially as the economy has gotten a little weaker,” Nelson added. “The tourism industry, hotels that struggle to pay employees a living wage—at some point the cost, and total costs, there’s only so much the consumer can tolerate.” 

Nelson said he wanted to see the county reform its planning and approval process to move projects more efficiently and quickly through the county’s system—including projects that have the potential to create TOT like the agricultural enterprise ordinance, the recreation master plan, and the Biltmore Hotel renovation project in Montecito. 

Second District Supervisor Laura Capps said that she was also invested in seeing these projects come to fruition, but the additional funding was needed to continue momentum on programs that address other county issues like homelessness and maintaining county employee salaries and services. 

“We’re good this year, but we are looking at a really tough outlook,” she said. “It’s a challenge to balance priorities, to keep momentum on homelessness and cleaning things up and also doing right by the businesses.”  

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