Measure K: Community debates Encinitas sales tax increase

ENCINITAS — This November, Encinitas voters will decide on Measure K, a proposed one-cent sales tax increase that could generate an estimated $15.4 million annually to fund public infrastructure and city services.

The measure has sparked debate within the community, with supporters and opponents weighing in on its potential impact on the city’s finances, infrastructure, and residents.

If Measure K is approved, the local sales tax would increase from 7.75% to 8.75%, aligning Encinitas with neighboring cities such as Del Mar and Solana Beach. The tax rate would be in effect for 10 years before expiring under a sunset clause unless renewed by voters.

Proponents

The San Diego County Taxpayers Association, which recently endorsed the measure, acknowledges a number of concerns in its analysis of the proposal but ultimately supports it, stating that the additional revenue is important for addressing the city’s growing infrastructure needs.

“Despite some of the risks, passing the measure will prove to be beneficial for the City as it generates additional revenue in funding the maintenance and supporting infrastructure projects,” the SDCTA stated in its study. “Additionally, the City has presented a clear timeline of how the money will be allocated and performance targets of what it hopes to achieve with the measure.”

The SDCTA’s study cites rising construction costs, which have increased by more than 9% annually in recent years, as a key reason for the tax. The city’s Infrastructure Task Force, referenced in the study, identified nearly $200 million in critical infrastructure projects, including road maintenance, storm drain repairs, and public safety improvements, which supporters say may not be completed without the additional revenue.

Proponents also highlight the establishment of an Encinitas Sales Tax Oversight Committee to review how the funds are spent and annual independent audits to ensure fiscal responsibility.

Mayor Tony Kranz, a vocal supporter of the measure, emphasized his commitment to spending the revenue on projects identified by the Encinitas Infrastructure Task Force.

“I don’t minimize the impacts that an increase in sales tax has on some people,” Kranz said. “But quite frankly, this measure is more important than even my race for mayor. So, you know, if Bruce [Ehlers] beats me, but the sales tax passes, I’ll be content. Because that’s what I’m more interested in, is providing the city the ability to do these projects that have been deferred for way too long.”

The SDCTA also notes that Encinitas’ tourism industry plays a significant role, with 40% of the city’s sales tax revenue coming from visitors. Supporters argue that the tax will enhance services and infrastructure, benefiting residents and tourists while boosting local businesses.

Opponents

District 2 council candidate Jim O’Hara and other Measure K opponents have expressed concerns about entrusting a future council with the substantial funds generated by the measure and question the level of accountability involved.

“The last thing we need to do is give a blank check to the City Council when the cost of living is going up, inflation is happening, and supposedly we’re trying to help make it more affordable and more accessible to live here,” O’Hara said. “To add on to the cost of that doesn’t really make a lot of sense.”

Opponents also raise concerns about the potential negative impact on tourism. Critics argue that raising the sales tax to 8.75%, one of the highest rates in San Diego County, could deter visitors who might opt for nearby cities with lower tax rates.

There are also worries about the tax’s effect on lower-income residents and businesses, many of whom are already grappling with rising living costs, inflation, and other taxes, such as income and property taxes. According to the SDCTA, this cumulative financial strain could significantly affect many Encinitas households,

A key point of contention is that the revenue will flow into the city’s General Fund instead of a special fund designated for the tax, granting the City Council discretion over its use despite the measure’s infrastructure goals.

Critics argue that without a dedicated fund, it’s harder to ensure the money is spent as intended, and some, like O’Hara, doubt whether oversight measures will provide sufficient accountability.

“They’ve just misspent the money on trophy projects and non-priority items to the point where they’ve ruined the budget,” O’Hara said. “Now they need to ask us for money.”

Additionally, the city has not allocated the expected revenue to specific projects in advance, instead identifying general targets, making it harder to track the city’s performance and “account for whether the money generated by the tax is actually going to the projects mentioned in the original measure,” the SDCTA noted in its report.

While the measure establishes an independent Encinitas Sales Tax Oversight Committee to review spending and report findings to the City Council annually, the proposal does not detail its members or composition.

In its analysis, the SDCTA notes that historically, these types of tax revenue oversight committees have included a member from the San Diego County Taxpayers Association. However, the absence of this stipulation in Measure K raises concerns about whether taxpayer representation — and thus broader accountability — will continue.

Despite each of these concerns, the SDCTA said that if proper oversight is maintained, the revenue from the tax increase could effectively fund essential infrastructure projects.

“Historically good sales tax revenue aided by long-term revenue estimates further highlights the measure’s benefits outweighing the risks,” the SDCTA said.

As a general sales tax increase, the measure requires a simple majority of voters to pass, or 50% plus one vote to pass in the November 2024 general election. If approved, Encinitas’s current low sales tax rate would rise to one of the highest in the county.