In my many decades writing about local politics, I’ve seen a lot of odd things. But I think this is new. In 2024, voters in the city of Orange rejected Measure Z, a half-cent sales tax increase, by 50.43% to 49.57%.
Voters weren’t even given a breather of one election cycle, as would make sense to let matters settle. By a 5-1 vote on June 3, the Orange City Council placed on the Nov. 3 ballot a 1-cent increase in the sales tax. Double Measure Z’s hit.
Called the Public Safety/Essential Services Measure, it would raise the city sales tax from 7.75%, the base in Orange County, to 8.75%. The new sales tax hike supposedly would rake in $37 million. But that’s assuming many consumers didn’t start shopping in Anaheim, Tustin and Fullerton, where they still could enjoy the lower 7.75% tax.
The Orange tax increase would be “temporary” for 13 years. But there’s no guarantee the city will get its fiscal house in order by then, and won’t ask for an extension. As Nobel economist Milton Friedman quipped, “Nothing is so permanent as a temporary government program.”
The second tax increase Orange voters will face is the Hotel Tax Modification Measure. “Modification” is a weasel word for increasing the tax from 10% to 14% for hotels with 11 rooms or more, supposedly bringing in an additional $3 million a year.
The city website says, “Orange residents do not pay the hotel tax” unless they stay in a city hotel. Voters should check a study published in 2018, “Taxing the Travelers: A Note on Hotel Tax Incidence,” by Clay Collins and E. Frank Stephenson. It found Georgia’s $5-per-night hotel tax from 2015 reduced hotel stays by about 92,000 rooms per month. And fewer guests meant less spent on local businesses.
The city website boosting both measures claims a projected deficit of $27.6 million for fiscal year 2026-27 and more than $122 million projected over the next six years. But Councilman Denis Bilodeau, who is running for the state Board of Equalization, pointed me to a June 9, 2026 staff report from Finance Director Trang Nguyen.
It showed a $4.485 million “transfer in” from reserves to cover the operating deficit. That was even though the city sits on a $28.4 million catastrophic reserve balance. The deficit is a problem that must be dealt with. But it’s not an emergency. And it sure doesn’t need a $37 million remedy.
Bilodeau also said property tax collections are increasing at 3.5% per year, following property values.
Then there is the Annual Comprehensive Financial Report. The key number is the unrestricted net position. For fiscal 2024-25, the last year available, the ACFR calculates it “declined by $30.5 million to a negative $224.6 million, primarily due to pension-related liabilities and other long-term obligations.”
However, Bilodeau said the pension situation will be improved because on July 13 CalPERS posted a 14.8% preliminary investment return for fiscal 2025-26, which ended on June 30. Instead of making tax increases the first button to push, the best thing would be to wait for the next ACFR to come out in January 2027.
Compensation already is generous. According to Transparent California, in 2025 top total pay and benefits were: Police Captain Eric Rosauer $481,726, Fire Battalion Chief Robert Stefano $486,987 and City Manager Thomas Kisela $417,475.
The ballot wording for the sales tax increase promises it would “maintain City of Orange’s quality of life, such as 9-1-1 response; maintaining police/fire protection; preventing crimes/thefts,” etc. But Bilodeau said, despite the constricted budgets of recent years, “Crime has gone down. They’ve done a great job.” The Orange Police Department’s website boasts a 21% reduction in crime from 2024 to 2025.
Taxpayers are dealing with family and business budget problems from rising gas, diesel, food and other costs. A sales tax increase is a regressive tax, meaning it hits the poor and middle class the hardest when they buy necessities.
Orange isn’t in a fiscal free-fall. Voters rejected a tax increase once. They should do so two more times on Nov. 3.
John Seiler is on the SCNG Editorial Board