Orange Considers Car Rebate as Auto Industry Poised to Oppose Sales Tax Measure
Orange City Council members are considering a rebate for residents buying cars in town as the automotive industry gears up to oppose the 0.5% sales tax increase measure on November’s ballot in an effort to keep the city financially afloat.
The Orange County Automobile Dealers Association has raised at least $750,000 to oppose the sales tax measure stemming from a $500,000 loan to itself and $250,000 from the California Automobile Dealers Association, according to filings on the California Secretary of State’s website.
On Tuesday, council members voted 6-1 for staff to come back with a study examining the impacts of a $300 car rebate on a sliding scale in a $1.5 million annual program that hinges on voters passing the sales tax measure.
A Rebate Proposal Ahead of Industry Opposition
Some council members said the proposal is an attempt to stem auto industry opposition against the ballot measure.
“The auto dealers are funding a campaign … opposing this,” Councilman Jon Dumitru said at Tuesday’s council meeting. “My question is do they have a rebate program in Buena Park, where they have a 1 cent sales tax (increase)?”
City staff said Buena Park doesn’t have a rebate program.
Councilman John Gyllenhammer, the lone dissenting vote, said the idea of a rebate surfaced because of dealership opposition to the sales tax increase.
“I think this is here because there’s the specter of an increased sales tax,” Gyllenhammer said. “We are picking an industry that we want to subsidize and that is something we have to decide if that’s what we want to do.”
As of Tuesday, city campaign finance disclosures don’t yet show any spending things like mailers and digital advertising opposing the sales tax proposal.
Over the summer, representatives from local car dealerships were critical of the sales tax proposal.
At the June 25 city council meeting, Craig Whetter of the Wilson Automotive group that owns Toyota of Orange, said similar sales tax increases impacted dealerships in Santa Ana and Garden Grove.
“In Santa Ana, they lost 40% of their revenue between 2017 and 2023 – those dealers lost 40% of their revenue due to a tax increase. And in Garden Grove it was 23%,” Whetter told council members.
The rebate was originally pitched at $500 for Orange residents buying in the city – new and used cars from one of five franchised dealerships in Orange.
City staff said the automotive industry pitched major points of the proposal.
Councilwoman Arianna Barrios lambasted the idea at Tuesday’s meeting, saying a $500 rebate is more than the 0.5% sales tax increase would generate on car purchases.
“We shouldn’t be beholden to outsiders who basically are telling us our own business. So I just want to make sure what you bring back is an economic report that gives us options and is not under the thumb of the auto dealers,” Barrios said at Tuesday’s meeting.
Councilwoman Ana Gutierrez, echoing Barrios’ comments, said the rebate should be extended.
“It’s not fair, it should not just be these five dealerships, we have 11 others that should participate as well,” she said.
Mayor Dan Slater agreed on lowering the rebate amount to match the potential sales tax increase.
“As my colleagues are stating, this needs to be reasonably done and not a taxpayer giveaway,” Slater said.
During Tuesday’s public comment, resident Eddie Albright criticized the car rebate and told council members it’s a move to ease auto dealership opposition.
“I think this is totally wrong,” Albright said. “I don’t think we should isolate anybody. I think if we’re going to make a half a percent sales tax, it should be across the board for everybody.”
Confronting a Budget Crisis
Earlier this year, Orange officials were grappling with a massive budget shortfall.
In June, city council members voted to put the sales tax proposal on the ballot after a series of debates throughout different meetings that began in May.
[Read: Orange Asks Voters to Raise Taxes To Bail Out City Budget]
At the same time, they slashed spending in an effort to close a $19 million budget gap – reducing the deficit to around $7 million.
Council members also initially slashed the crossing guard program until reinstating a portion of it after residents protested the move.
Orange County Supervisors Vicente Sarmiento and Don Wagner recently stepped in to help fund the gap.
[Read: OC Supervisors Help Fund Crossing Guards in Orange Amid City Budget Cuts]
City staff have reported an uptick in vermin and trash at city hall and other public buildings after janitorial services were slashed.
[Read: Cuts to Orange City Hall’s Janitorial Services Leads to Vermin Problem]
On Tuesday, staff said they were able to reorganize some existing janitorial services to eliminate the vermin.
“That will eliminate any potential vermin problems at our restrooms and so forth,” Slater said.
Meanwhile, city staff said the car rebate proposal likely won’t come back until after the Nov. 5 election.
Spencer Custodio is the civic editor. You can reach him at [email protected]. Follow him on Twitter @SpencerCustodio.
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