TO: Honorable Mayor and Members of the City Council
FROM: Jarad Hildenbrand, City Manager
1. SUBJECT
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Consider revenue measures to address ongoing structural General Fund deficits and provide direction for the November 2026 General Municipal Election
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2. SUMMARY
The City of Orange continues to face recurring structural General Fund deficits as operating revenues have not kept pace with rising labor costs, inflation, contractual services, and infrastructure maintenance needs. Over the past several budget cycles, the City has balanced budgets through service reductions, deferred capital projects, and one-time internal fund transfers. These measures are not sustainable long-term solutions.
Without additional ongoing revenue, future budget balancing will likely require deeper service reductions, deferred infrastructure investment, and increased pressure on public safety and quality-of-life services.
To improve fiscal stability and establish ongoing revenue sources, the City Council previously directed staff to return with potential revenue measures for consideration. This report provides an overview of several potential options, including a transactions and use tax (sales tax), transient occupancy tax increase, utility user tax, vacant property tax, cannabis gross receipts tax, parking operator tax, documentary transfer tax, the potential sale of the City's water and sewer utility systems, as well as modernizing the City's business license tax.
Staff seeks City Council direction regarding which measures warrant further analysis and whether preparation of ballot resolutions should proceed for the November 2026 General Municipal Election.
3. RECOMMENDED ACTION
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1. Review and discuss potential revenue measures to address ongoing structural General Fund deficits; and
2. Provide direction regarding which measures should proceed for further analysis, polling, public outreach, and potential ballot preparation for the November 2026 Genera...
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