Orange council advances 1% sales tax, hotel tax hikes to November ballot

The Orange City Council voted 5-2 Tuesday to direct staff to place a 1% sales tax increase on the November ballot, taking its most aggressive step yet to address a projected $20 million budget deficit that consultants have warned could push the city toward bankruptcy.

The vote escalates pressure on Orange voters to fund core city services after consultants warned of potential bankruptcy within a few years. The proposed tax would generate an estimated $37 million annually — but a smaller 0.5% version failed at the ballot in 2024, and the city carries roughly $400 million in total financial obligations.

The council's direction, reported by Voice of OC, sets a July 14 deadline to finalize ballot language. The proposed 1% sales tax would carry a 10-year sunset clause and be paired with a citizen oversight committee and a dedicated spending plan.

Mayor Dan Slater said the measure could succeed if the city made its case clearly. "If we can convince the taxpayers that we're going to wisely spend this money and that these are the priorities, then I think that the citizens will say, 'yes, that makes sense,'" he said.

Two council members voted no. Councilman Dennis Bilodeau pointed to the 2024 defeat as a clear signal from voters. "We asked the voters this question and it was answered, and that was at a half a cent and I know in my council division it failed miserably, so I'm going to pass on this one," he said. Councilman John Gyllenhammer disputed the urgency of the deficit entirely. "I would put the collective $37 million expense on our residents if I believed we needed that today. I do not believe we need that today," he said.

Supporters countered that the financial reality left little room for delay. Councilwoman Kathy Tavoularis said, "When people are coming up to me and saying, you don't have a problem, I'm having a little bit of a panic attack, because I can't get anything done for years." Councilwoman Arianna Barrios, who voted in favor, warned that even the full measure may fall short. "Everything we've seen so far said that the 10 year is not going to be near enough so I'm worried that we're just spitting in the wind," she said.

The council also voted 6-1 to advance a hotel bed tax increase from 10% to as much as 15%, a move the city estimates would generate approximately $3 million annually and tie Orange with Anaheim for the highest hotel tax in Orange County. Separately, the council voted 5-2 to explore legalizing cannabis retail stores and 6-1 to begin the process of converting Orange to a charter city — measures that could provide additional fiscal flexibility.

City staff must finalize ballot language by July 14. With roughly $400 million in total obligations on its books and a prior ballot measure already rejected by voters, Orange's path to fiscal stability now runs squarely through November.