Santa Barbara’s budget deficit continues to grow despite revenue sources Measure C (2017) and Measure I (2024), which were sold to voters as ways to close the budget gap, and which between them bring in over $45 million annually. This extra revenue was supposed to fund critical infrastructure, public safety, and essential city services. But despite these funds, the city is still grappling with increasing deficits due to rising costs — particularly in pensions, salaries, and infrastructure maintenance. As we approach the 2026 mayoral race, one thing is clear: the candidates are divided on the best way to handle the city’s financial future.
Measure C and Measure I–Never Enough
Kristen Sneddon, one of the mayoral candidates, has consistently advocated using Measure C and Measure I revenue for low-income housing and for reducing the general fund deficit. However, affordable housing projects take properties off the property tax rolls, reducing one of the city’s largest revenue sources. Property tax is our top revenue source at 39%, for a total of $53 million in revenue in 2024.
Mayor Randy Rowse has taken a more traditional approach, focusing on controlling spending and thereby avoiding future tax increases. Rowse has been vocal in his opposition to using reserve funds for recurring expenses, preferring fiscal restraint and ensuring long-term sustainability of the city’s finances
State Street Spending: An Ongoing Challenge
Santa Barbara’s State Street revitalization efforts have cost taxpayers millions in additional spending, contributing further to the growing deficit:
State Street Master Plan: $780,000 for consultant fees to develop the plan. The city eventually paid $570,000 to MIG, Inc. before terminating the contract. The remaining $343,250 in original funding was allocated to Moule & Polyzoides to complete the work.
Sidewalk Extensions (Pedlets): $528,170 spent on the project to extend sidewalks on the 500 block of State Street. This is a trial run for eventual hardscaping of extended sidewalks in that block, as a way to make it difficult for State Street to ever be re-opened for the purpose it served for the last 150 years: as our major traffic artery.
State Street Undercrossing
The city’s share of this project was $6.8 million out of the total $11 million, allocated for improving pedestrian access and safety.
Miscellaneous Improvements
Other smaller projects, such as flowerpots, lighting, and street maintenance, have added additional costs of $500,000 - $2 million.
This brings the total spending on State Street revitalization (including studies, consultants, and improvements) to $12–16 million.
Additional Costs Contributing to the Deficit
Employee Payouts: The city made payouts totaling $1.3 million for separation agreements with department heads, including $500,000 for the Rob Dayton retirement settlement. (I hope you remember why this happened)
Housing Trust Fund Allocations: The City Council has allocated $4 million in funds to the Housing Trust Fund over the past two years to support affordable housing projects, despite concerns about taking properties off the tax rolls.
Immigrant Services: Santa Barbara has spent approximately $500,000 on immigrant-related services, including legal aid, healthcare, and shelters for undocumented individuals.
Total Additional Costs: ~$5.8 million
Another Proposed Tax Increase
This Tuesday, during a City Council meeting, members discussed yet another proposal to raise taxes, this time, the Property Transfer Tax (PTT) to help close the budget gap. Somehow, reducing expenses is never up for discussion.
Here’s What You Need to Know
City Council is currently debating a measure on the ballot to raise the Property Transfer Tax. This would increase costs for property buyers and sellers in Santa Barbara, and create another revenue stream for the city’s general fund.
Mayor Randy Rowse voted against this idea. He has consistently opposed raising taxes on Santa Barbara residents and believes the city should focus on controlling spending rather than burdening taxpayers with more taxes.
Consultant fees were incurred to help develop this Property Transfer Tax proposal, and additional staff time and resources are being used to research, prepare, and put it on the ballot. While this may be presented as a revenue solution, it’s important to acknowledge the costs involved in getting these measures to the public and taxpayers will ultimately bear those costs.
Rowse made it clear at the Tuesday meeting that he would not go to the taxpayers again for another tax increase. This reinforces his commitment to fiscal discipline and a stance that prioritizes budget control over revenue hikes.
The Costs of Consultant Fees and Staff Time
Consultants are hired for their expertise in creating tax increase measures like the Transient Occupancy Tax (TOT) and Property Transfer Tax (PTA) proposals. These consultant contracts cost the city thousands of dollars — money that could otherwise reduce the growing budget deficit.
Additionally, the staff time spent researching, preparing, and analyzing these measures is another hidden cost. While staff work to develop tax proposals that might close the budget gap, their work does not directly translate to tangible solutions for the deficit.
Councilmember Sneddon has supported using these tax measures as part of her approach to fund critical services. But her stance comes with additional costs that taxpayers will need to bear — both through higher taxes and through the staff and consultant resources used to prepare these measures.
But Wait; That’s Not All
And before you think we’re done tallying up the financial impact on Santa Barbara taxpayers — think again.
The City Council majority didn’t just increase sales tax and contemplate propertyrelated taxes — it also recently implemented a host of new rentrelated regulations, including:
Rent Freeze
Rent Registry
Rent Stabilization
Mandatory Lease Renewal or pay three times the rent to the tenant to move out, yet that was challenged and is now “only” two times the rent.
Rather than being isolated policy discussions, these initiatives came while the city was simultaneously raising fees on essential utilities such as:
Water
Sewer
Trash
Clean Energy rates
All these costs — combined with coerced rent limits — put additional financial pressure on local households and landlords alike. According to a news release from the Santa Barbara Rental Property Association (March 3, 2026), these measures collectively have had cumulative economic effects on housing providers and renters, contributing to a climate where:
Operating costs for rental properties have increased,
The burden of utility and service charges has risen,
The local tax and regulatory environment has become more challenging for working families and small property owners.
Councilmember Sneddon has been leading the efforts for rent freeze, rent stabilization, and rental registry. These initiatives could cost an additional $6 million annually to implement and run, further burdening taxpayers and property owners.
The Santa Barbara Rental Property Association (SBRPA) will be filing legal action against the city to invalidate the temporary rent freeze and halt the work on the permanent rent stabilization program. They argue that rent control violates private property rights and impedes economic reality, with landlords unable to earn a Fair Market Return on their investments. SBRPA_News_Release_3_3_2026.pdf
In other words: the city hasn’t just increased taxes and fees — it has layered on regulations that impact everyday cost of living and local economic stability.
When you add these burdens to the millions in taxpayerfunded spending and proposed tax increases, the picture becomes even more significant:
Not only has the city spent tens of millions on projects and payouts,
Not only is the budget still in deficit despite new revenue streams,
But residents are also facing higher utility bills, complex new rent controls, and greater cost pressure across the board.
This is a multifaceted economic attack on homeowners, renters, and small businesses by a City Council majority, led by Sneddon, that refuses to look at spending cuts first.
Final Thoughts
Santa Barbara’s growing deficit is a key issue in the mayoral and council race. Mayor Rowse takes the traditional approach–control costs before raising prices. Increase city revenue by growing the economic pie, not by raising the rates. Kristen Sneddon believes that taxpayers are an endless piggy bank for whatever social justice program is currently at the top of the Democratic Party’s list.
Remember, last year’s budget vote was 4/3, which I’m pretty sure has never happened before; budget approvals are usually unanimous. The consequences of that approved budget turned out even worse than we thought. The three that voted against last year’s budget were Rowse, Friedman, and Jordan.
These three members opposed dipping into reserve funds to cover operating expenses and opposed the budget being adopted in a way that might deepen future fiscal strain. Guess what? They were right.
Community Calendar:
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Bonnie-Thank you for sounding the alarm on this most important local issue-the city budget process is a slow-motion train wreck! I wrote my District Rep (Jordan) ahead of the meeting this week asking him to clearly state his opposition to raising taxes. He declined stating he wanted to let the voters decide. I reminded him the 60% of the electorate are renters, who do not feel the same pain as homeowners when these taxes are increased. Socialism is alive and growing in our community thanks to the progressive council.
Finally, a hard-hitting specific dose of reality and cold water plunge into the most critical topic for all voters to consider this coming election -2026.
Voters take note, city council members it is time to stand and deliver. Thank you so much, Bonnie. You drew the lines voters need to consider with great clarity. The free ride is over.
Sneddon continues to preach more free stuff for everyone. From her own $750,000 taxpayer funded family income perch. (Transparent California)
Rowse, long time small business owner, continues to beat the drum for fiscal sanity, prudence and refusal to keep kicking this city red ink can down the road to another irresponsible, term-limited and city employee union-dominated city council.