Santa Barbara County: Where Dartboards Are Used to Budget!
Most insiders know that our $1.4B County is relatively inept when it comes to financial forecasting. One need only look at our $118M North Branch Jail-Mahal with an estimated cost of $67M (what’s $51M between friends) to know our ability to budget is broken. Well, it’s happening yet again with our newest revenue savior — cannabis. Allow me to explain:
For those few who read my pieces you know that to understand our County one needs to focus on our spending, not our revenue. Remember, we choose to give just $300K each year to the Office of Arts and Culture (it’s why Santa Barbara needs twice as many Not-for-Profits as other similar sized counties), while spending $730M (up $30M) annually on salaries. Last year we received $130M in COVID-related relief yet paid just $10M or so (thankfully, it is increasing) against our $471M deferred maintenance budget. Our entire County is crumbling yet no one makes the hard choices or outlines a thoughtful plan forward.
Anyway, in Q1 of this year, cannabis tax revenue plummeted 26% from the prior year to a laughable $3.1M — not including the mountain of County cannabis-related costs. Now remember, this is against about 300 acres of cannabis with an estimated crop value of $1.2B! The vowel at the end of my name rages against this deal: We are being bamboozled! Yet, the County continues to cling to the tax scheme and even makes impossibly feeble attempts to justify the unjustifiable. Curious.
In spite of the decrease, the County forecasted our annual cannabis revenue would reach $19M. Well, before the ink has even dried, guess what the newest forecast portends? $10.8M, off by nearly 80%! Who creates these numbers? Are dartboards part of the process? Are the Supes asking even basic questions? After all, these are budget forecasts that they rely on and hire against, i.e. they matter!
The good news is that the County is finally looking at using a Monterey County-style square foot tax scheme that does not, like Santa Barbara, require self-reported cash revenue. The Monterey Model taxes on each square foot of cultivated cannabis, is guaranteed, and is easier to police. In fact, Monterey collected $20.4M — guaranteed — against just 100 acres of Cannabis. This represents about 4% of the crop value. Santa Barbara County may collect $10M against 300 acres of cannabis, representing less than 1% of the crop value. If Santa Barbara was using the Monterey Model, we would have earned $45M more in revenue while also discouraging overgrowth. Never forget, we are marching from 300 acres to an allowed 1,755 acres (scary!) throughout the county.
The Monterey Model taxes on each square foot of cultivated cannabis, is guaranteed, and is easier to police.
Unfortunately, the same folks who gave us our revenue forecast are now the ones providing the numbers for a possible shift to square foot taxing. Hence, the note provided by County Executive Officer Mona Miyasato to the Supes was not only razor thin, it was devoid of depth or financial imagination. Moreover, it used tiny square foot numbers that are nowhere near the $8 per square foot used in Monterey. So, yeah, we may switch to this new model, but if the Supes continue to twist for cannabis then we will be trading apples for, well, apples! Perhaps that’s the reason why certain Growers supported the proposal. Hint: When the folks you’re seeking to tax actually like your taxing proposal, it is probably a bit low… just saying.
Anyway, yours truly will be keeping an eye on our five Supervisors as they discuss this change. Is anyone going to lead? Will they attempt to punt their tax scheme to the electorate in a hastily crafted referendum? Whatever happens, we can only hope the financial models used — if any — are of the quality we should expect from a County that now employs 4,460 full-time people. We’ll see…
Jeff Giordano, SB County Resident