Orange council delays sales tax vote as $20M budget gap looms

The Orange City Council on Tuesday postponed a decision on placing a 1% sales tax measure on the November ballot, deferring the vote to May 12 while the city faces a projected $20 million budget shortfall and mounting warnings of deeper cuts to public safety.

The postponement marks the second time in two years that Orange has hesitated on a major tax proposal, with the July 14 deadline to submit a ballot measure approaching. A 1% sales tax, if passed by voters, is projected to generate $37 million annually — nearly double the shortfall.

Orange has already made significant cuts ahead of fiscal year 2026-2027, reducing library hours, suspending sidewalk steam cleaning, curtailing Santiago Creek maintenance, eliminating city-sponsored events and Old Towne parking garage security, and cutting 50 vacant positions, Voice of OC reported. City officials also propose transferring $17 million from capital improvement and other spending funds to help balance the books.

Councilman Jon Dumitru urged colleagues to look past the political risk of backing a tax increase. "I'm keenly aware that people have a lot of hesitation to vote on this dais for sales tax. I get it. It's in some cases with some folks political suicide. You have to look past that and put the politics aside and have honest accountability with yourself," Dumitru said at Tuesday's meeting, according to Voice of OC. He pressed the fiscal stakes further: "This is not just about balancing a spreadsheet. This is about maintaining core services that keep the community safe. Without additional stable revenue, we face very real decisions, and kicking the can will mean reducing service levels. There's no way around it."

Mayor Dan Slater backed a ballot measure and cautioned against another last-minute rush. "There is absolutely no way we're going to get out of this mess without a sales tax increase," Slater said, according to Voice of OC. "I do not want to see us putting this off to the last minute like we did last time. It's not fair to our citizens. It's not fair to our employees. All we're doing is giving the voters a chance, an opportunity to say, 'Do we want a mediocre city where we're just scraping by or do we want to be a first class city?'"

Not all council members agreed. Councilman John Gyllenhammer, appearing by teleconference, expressed doubt about the need for new taxes. "It's important to have a really clear understanding of the 2026-2027 budget. Based off of what I'm currently seeing, I don't believe we need a sales tax," he said at the meeting, according to Voice of OC. Councilwoman Kathy Tavoularis struck a middle path, acknowledging the depth of cuts while urging a broader look at options. "We've cut all we can cut, but the costs keep on coming," she said. "We can't put all our apples in one basket. That's why I think it's important that we don't divide these discussions, that we look at everything as a menu of items, and not repeat the mistakes of our predecessors."

City Manager Jarad Hildenbrand pressed the council for a clear direction. "At this point in time, the community is really waiting for the City Council to make the decision. Do we look for long term revenue and material revenue that will help solve the budget and provide financial stability, or if we don't go down that path, what cuts are next?" Hildenbrand said, according to Voice of OC. Beyond the sales tax, the city is exploring charter city status, hotel bed taxes, utility taxes, parking garage taxes and cannabis legalization as alternative revenue sources.

The council directed the city manager to begin educating residents about the city's revenue needs before the May 12 meeting. The proposed 1% sales tax measure would include an 11-member oversight body to monitor how funds are spent. If the council moves forward, it must submit the measure by July 14 to appear on the November 2026 ballot.