Orange County voters will see an unusual pattern on the November ballot: multiple cities asking residents to raise or extend local sales taxes to stabilize budgets strained by structural deficits, rising personnel costs, and years of aggressive pay increases.

Santa Ana is at the center of this trend, followed by Orange, San Clemente, and Costa Mesa, each facing its own version of a long‑term fiscal squeeze.

Santa Ana: Making Its 1.5% Sales Tax Permanent to Slow a Decade of Deficits

Santa Ana voters will decide whether to make permanent the city’s 1.5% Measure X sales tax, originally approved in 2018 and scheduled to phase down in 2029 and expire in 2039. City staff warn that without the tax, Santa Ana faces deficits reaching roughly $30 million by 2028–29. Keeping the tax permanent reduces the projected deficit to about $13 million, but does not eliminate it.

Santa Ana’s annual revenue from Measure X reached about $83 million last year, making it one of the city’s largest single revenue sources. The city’s total debt is not listed in ballot‑measure reporting, but countywide financial documents show Orange County governments collectively carry billions in liabilities, driven heavily by pension and retiree medical obligations. Santa Ana’s structural imbalance is tied to rising personnel costs, expanding service demands, and pay increases approved for police, fire, and general employees.

Cuts alone cannot fix Santa Ana’s long‑term financial problems. The city already made millions in reductions this summer, and further cuts would hit public safety, street maintenance, youth programs, and homelessness services. The city’s own projections show ten years of deficits even with the tax extension, meaning the imbalance is deeper than any single revenue measure.

Orange: A One‑Cent Sales Tax to Avoid a Fiscal Cliff

The City of Orange placed a 1% sales‑tax increase on the ballot after consultants warned the city could face municipal bankruptcy without new revenue. Orange projects a deficit of more than $20 million next fiscal year. The proposed tax is expected to generate about $37 million annually, enough to stabilize operations but not enough to reverse years of structural imbalance.

Orange’s total debt is not detailed in ballot reporting, but the city’s crisis stems from rising personnel costs, pension obligations, and years of underfunding essential services. Officials already plan to eliminate vacant positions and transfer $15.5 million from other funds just to get through next year. Cuts alone cannot close a $20‑plus‑million structural gap.

Orange’s financial strain is heavily tied to compensation growth. City leaders say they cannot retain police officers or fund fire services at current levels, a clear sign that pay increases have outpaced revenue growth.

San Clemente: A 1% Sales Tax for Beach Restoration and Wildfire Prevention

San Clemente voters will consider a 1% sales‑tax increase expected to generate about $15 million annually. Unlike Santa Ana and Orange, San Clemente’s measure is driven by infrastructure needs: beach restoration, erosion control, and wildfire mitigation. Voters rejected a 0.5% tax in 2024, but city officials argue that the escalating cost of sand replenishment and environmental protection requires a stable revenue stream.

San Clemente’s total debt is not listed in ballot reporting, and the city is not facing a structural deficit. Instead, it faces multi‑million‑dollar capital needs that cannot be met through cuts. Personnel costs are not the primary driver of this measure, though they remain a significant part of any city budget.

Costa Mesa: A Major Business‑Tax Increase Instead of a Sales‑Tax Hike

Costa Mesa is not pursuing a sales‑tax increase, but its November ballot includes a large business‑license tax overhaul. The current cap of $200 for large businesses would rise to as much as $15,000 for companies earning more than $500,000 annually. The city argues that its business‑tax structure is outdated and fails to capture revenue from major retailers and corporate operations.

Costa Mesa’s total debt and annual revenue are not detailed in ballot reporting, and the measure is not directly tied to pay increases. However, personnel costs always pressure city budgets, and modernizing revenue sources is a common response to rising expenses.

Countywide Fiscal Context: Why So Many Cities Are Turning to Sales Taxes

Orange County’s recommended FY 2026–27 budget shows $5.2 billion in General Fund revenue and $6.9 billion in total liabilities and deferred inflows. Cities across the county face escalating pension obligations, aggressive pay increases for police, fire, and general employees, slower revenue growth, and higher costs for homelessness, public safety, and infrastructure. These pressures explain why multiple cities are turning to sales taxes, the fastest way to raise revenue without cutting core services.

Impact on Residents: Sales Taxes Hit Low‑Income Communities the Hardest

Sales taxes are regressive. Low‑income residents spend a larger share of their income on taxable goods, while higher‑income households spend more on untaxed services and online purchases. In cities like Santa Ana, where poverty rates exceed county averages, a permanent 1%–1.5% sales‑tax increase can cost struggling families hundreds of dollars per year.

The burden falls hardest on working‑class families, renters, seniors on fixed incomes, and small businesses serving low‑income neighborhoods. Meanwhile, cities continue approving large pay raises, widening the gap between government costs and resident incomes.