The economic future of the city of Santa Maria is dependent on growth, said City Manager Rick Haydon during his presentation Friday morning at the North Santa Barbara County Economic Summit.
The event, part of UCSB's Economic Forecast Project, presented a snapshot and a look at the future of economic development in the North County region.
“Is city government sustainable?” Haydon asked the crowd of local and state business and government leaders.
The answer is, only if Santa Maria can keep growing.
Faced with rising costs, unfunded state mandates and changes in current laws, like California’s Fair Wage Act of 2016 that will raise the state’s minimum wage to $15 per hour by 2021, Santa Maria will only be sustained by growth in its property tax and sales tax base.
“The only way we are going to be able to do that is increased development -- increased residential, increased commercial,” Haydon said.
The rub about the growth of Santa Barbara County’s most-populated city is that it's running out of space to grow.
“We are a landlocked city,” Haydon said.
Once currently slated projects like the Enos Ranchos and Betteravia developments and Preisker Commercial Center are completed, the city will be nearly out of developable land. He added that local leaders have had discussions about expanding, but there is significant cost involved in annexing county-governed property.
The city’s total budget is $186 million. Its general fund budget is about $68 million. The city spends about $1.3 million a week or $186,000 a day of its general fund money on its regular expenses.
The city’s largest expense is its people and the cost that goes along with them.
“We have a large staff. Five hundred full-time employees and 200 part-time or limited service employees,” Haydon said.
Of those 700 employees, about 50 percent work in public safety and the police or fire departments.
“One out of every four full-time employees works for the city as a police officer,” Haydon said. “That shows you that our priority is public safety.”
Sales tax and property tax are the city of Santa Maria’s main funding sources.
The city manager told the audience gathered at the Radisson Hotel in Santa Maria that “the heart of the city is sales tax. A third of our revenue comes from sales tax.”
Property tax used to be the lifeblood of California, Haydon explained, but now most property tax revenues go to the state.
“Now the city receives 10 percent.”
According to Haydon, the median value of a single-family home in Santa Maria is about $335,000. Property taxes on a home at that price would be $3,350. Of that amount, the city would only receive $335.
With salary and benefits, a starting police officer in the city of Santa Maria costs the city about $100,000. To afford one police officer, the city needs 300 homes valued at $335,000 or twice that number for homes valued at $170,000.