Fiscal Outlook

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Fiscal Outlook & Long-Term Financial Planning

Overview Adopted Budget PowerPoint Presentation Council Agenda Item FAQ

Overview

Calabasas is known for its disciplined financial management, high quality of life, and commitment to delivering exceptional services. The City has consistently maintained balanced budgets, strong reserves, and exceptional public safety and community amenities, all while keeping taxes low and living within its means.

However, rising costs for public safety, emergency response, wildfire preparedness, insurance, utilities, and contract services are now outpacing the City's modest revenue growth. Despite years of careful planning and cost control, Calabasas faces a growing structural deficit that, if unaddressed, could threaten the City's ability to maintain the services residents rely on.

What the City Has Done So Far

Calabasas has already taken significant steps to balance budgets and live within its means, including:

These actions have helped preserve services in the short term, but they are not a long-term solution. Reliance on one-time funds and deferred investment cannot continue indefinitely without affecting service levels, infrastructure, and emergency preparedness.

Key Fiscal Facts & Why This Matters Now

Calabasas’s current total sales tax rate is 9.75%, of which the City receives only 1% to support local services.
Of roughly $76.1 million in sales tax generated within the City, only about $7.8 million is returned to Calabasas; the remainder goes to the State, Los Angeles County, and other agencies.
Approximately 57% of sales tax collected in Calabasas is paid by non-residents (people who shop, dine, or visit but do not live in the City).

Los Angeles County’s local sales tax rate is capped at 10.75%. If Calabasas does not act, the remaining capacity could be used by LA County or a regional special district. In that scenario, residents would still pay the higher rate, but the additional revenue would be controlled and spent by outside agencies.

The City Council is therefore examining whether a locally controlled, voter-approved sales tax measure is an appropriate tool to maintain services, invest in aging infrastructure, and keep Calabasas fiscally strong in the years ahead.

Frequently Asked Questions

Has the City already approved a new sales tax measure?

No. The City Council has not approved placing any new revenue measure on a ballot. At this time, the Council is reviewing the City’s long-term fiscal outlook, receiving staff presentations, and considering options, including a potential local sales tax measure, to address projected structural deficits and unfunded needs.

Why is Calabasas discussing long-term fiscal sustainability now and what's driving the gap?

Costs growing faster than revenues (labor, construction, utilities, & contracts)
State/County allocation constraints (City retains 1 cent of every sales-tax dollar and receives only 4.7% of property tax, the second lowest share out of 88 cities in LA)
Reliance on one-time funds is not sustainable
External pressures: inflation, insurance, supply chain, increasing pension and insurance obligations
Unfunded Capital Needs

What steps has the City already taken to control costs and balance the budget?

The City has a track record of conservative fiscal management, including:

Maintaining balanced budgets and strong reserves.
Reducing the City’s workforce and holding vacancies open where feasible.
Implementing hiring freezes.
Renegotiating or eliminating certain contracts and service agreements.
Deferring repairs, maintenance, and some capital improvement projects.
Using one-time funds and reserves to bridge recent operating gaps.

Most of the available cost-saving strategies have already been used. Continuing to rely on temporary fixes would eventually affect core services and infrastructure if recurring gaps are not addressed.

Why is a local sales tax being evaluated as an option?

The City has examined several revenue tools, including property-tax adjustments, a utility users tax, increases to the transient occupancy (“hotel bed”) tax, and franchise fee adjustments.

A voter-approved local sales tax (transactions and use tax) has emerged as an option because:

It would generate stable, locally controlled revenue that cannot be taken by the State or County.
Approximately 57% of sales tax collected in Calabasas is paid by people who do not live in the City, such as shoppers, diners, and visitors.
The cost is spread across a wide base rather than being borne solely by property owners.

A 1-cent (1%) local sales tax is estimated to generate about $5.3 million per year for Calabasas, including substantial contributions from non-residents.

How much would a 10.75% total sales tax rate add to a purchase?

A 10.75% total sales tax rate would mean:

An additional one penny for every $1.00 spent on taxable purchases.
An additional $0.10 for every $10.00 spent on qualifying purchases.

On average, a 1-cent local sales tax is estimated to equate to roughly $8.25 per resident per month, with non-residents paying the majority of the total sales tax collected in the City.

What would a new local sales tax be used for?

A locally controlled revenue measure could help:

Maintain 9-1-1 and sheriff response
Prepare for and respond to wildfires
Reduce fire risk by managing brush, other fuels and natural areas
Help prevent property crimes, and thefts
Repair and maintain streets, storm drains, and other essential infrastructure
Maintain parks, open space, and community amenities

Specific uses and spending priorities would be determined through the public process and outlined in future Council actions and ballot language, if a measure is ultimately placed before voters.

What happens if Calabasas does not act and another agency uses the remaining tax capacity?

Los Angeles County’s local sales tax rate is capped at 10.75%. If the remaining capacity is used first by LA County or a regional special district, residents and visitors would still pay the higher rate in Calabasas, but the additional revenue would be controlled and allocated by those outside agencies.

If Calabasas establishes its own locally controlled measure first, the final 1% could generate approximately $5.3 million per year that stays in Calabasas, subject to local oversight and public reporting.

What accountability and oversight would be in place?

Any future local revenue measure would include strong accountability and transparency provisions. The City Council has discussed:

Establishing an independent Citizens’ Oversight Committee to review spending.
Requiring regular public reports on how every dollar is used.
Continuing annual independent financial audits.

These safeguards are designed to ensure funds are used only for locally authorized purposes and in alignment with community priorities.

How can I stay informed and provide input?

Community input is essential. Residents are encouraged to:

Review City Council agendas and staff reports related to fiscal sustainability.
Watch or attend study sessions and public meetings.
Participate in outreach opportunities.
Visit this Fiscal Outlook page for updates as new information becomes available.

Share your input by emailing the City at Info@CityofCalabasas.com