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State Controller Betty Yee also speaks at a luncheon where Mayor Charlie Uhrig and City Manager Xenia Bradford outline finances, goals and more

Solvang is thriving with record-setting revenue from two types of key taxes vital for its financial health, City Manager Xenia Bradford said Wednesday.

The Solvang State of the City presentation attracted 175 people to Craft House at Corque, where State Controller Betty Yee also spoke during the luncheon organized by the Solvang Chamber of Commerce. 

Bradford provided an update on the city’s finances, projects, goals and more during her presentation about the small city that heavily relies on tourism.

"We actually really enjoyed record-high revenue over the last year in ’21-’22,” she said. 

The almost $2 million collected in sales taxes marked “the highest we have ever had since the city incorporated,” Bradford said about Solvang, which became a city in 1985.

Likewise, the transient occupancy tax, or hotel bed tax, has increased to nearly $5 million, also the most in the history of the city, she said. 

"A little factoid for everybody to know about Solvang and how unique we are — we are the third most dependent city in the state of California on our transient occupancy tax,” she said, adding that the revenue pays for basic services including parks and public safety.

“Our local businesses and hotels have had an amazing year during this last year, and that prosperity has also helped pay for services for our residents,” Mayor Charlie Uhrig said.

Despite the current rosy revenue status, Solvang faces significant challenges as it needs to increase water supply and independence along with upgrading its wastewater treatment plant. The city also is working to update its General Plan to serve as the blueprint for Solvang's future. 

These costly projects along with concerns about a looming recession have led city leaders to ask Solvang voters in the Nov. 8 election to approve Measure U to boost the sales tax rate 1%, from 7.75% to 8.75%. 

A recent survey of voters found general support for the tax hike to improve streets, public safety and senior, youth and adult recreation programs, Bradford said.

“Measure U will continue to give Solvang local control and bring local funds for local needs. No funds can be taken by Sacramento,” Bradford said, wryly apologizing to the state controller sitting in the audience.

If voters approve Measure U, the city will appoint an independent oversight committee to ensure the new funds are spent as promised, she said. 

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“As two-thirds of Solvang sales tax is paid by out-of-town visitors and tourists, if enacted, Measure U ensures they pay their share for utilizing our city’s services,” she said.

The sales tax is not charged for groceries and prescriptions, so the tax hike wouldn't impact Solvang's senior citizens or low-income residents.

Uhrig became emotional as he thanked the community for working together to help others get through the COVID-19 pandemic.

“By the giving of your time and financial support to the food banks and various nonprofits, Solvang residents have maintained the attitude of neighbor helping neighbor and kept the sunshine in our fields,” Uhrig said in a reference to the fact that Solvang means “sunny fields."

Before Uhrig’s and Bradford’s presentations, Yee noted the state’s relatively healthy coffers.

“For cities like Solvang, extra money in California's pockets and California’s coffers means extra money in all your pockets as well," Yee said.

However, she added, signs including labor shortages, inflationary pressures and other factors point to the start of a recession. 

She also noted the importance of small businesses to the health of the state, the world's fifth-largest economy.

“We believe this truly will be the engine that will restart or reignite our economy here in California,” she said.

Still, the state will need to look at changes, including tweaking the tax structure, creating ways to sustain the workforce and investing more in public education, she added.

George Leis, president and chief operating officer for Montecito Bank & Trust, noted that the Solvang Chamber of Commerce, which has marked its 100th anniversary,  has served as an "amazing advocate for the business community" during the pandemic.

During the past three years, small businesses have had to adapt, reinvent themselves and persevere, Leis added.

"You've shown what’s possible when you face challenges. You accomplished so much under such immense pressure," he said, adding that business owners have pressed forward when they might have considered giving up. “I believe that's what they call grit and … you should be so proud of yourselves."

— Noozhawk North County editor Janene Scully can be reached at .(JavaScript must be enabled to view this email address) . Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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