Santa Barbara Looks to Hike Property and Hotel Taxes

City officials propose raising Real Property Transfer Tax and Transient Occupancy Tax to address growing budget deficits.

Published on Feb. 26, 2026

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With a $5.9 million budget gap this year and a projected $14.6 million deficit for fiscal year 2027, the Santa Barbara City Council is moving forward with proposed increases to the Real Property Transfer Tax and the Transient Occupancy Tax (TOT) to generate revenue. The proposals were reviewed during the city council's February 24, 2026 meeting, and if approved by voters in November 2026, the tax increases would take effect January 1, 2027.

Why it matters

Santa Barbara, like many cities, is facing growing budget deficits due to a variety of factors. The proposed tax hikes on property sales and hotel stays are an attempt to shore up the city's finances and avoid depleting its reserves by the end of fiscal year 2028.

The details

The city is proposing to raise the Real Property Transfer Tax rate from $0.55 per $1,000 of value to $9.50 per $1,000 on property sales of $3 million or more. This is projected to generate $5.1 million annually. The city is also proposing to increase the Transient Occupancy Tax (TOT) from 12% to 14%, which is estimated to generate $5.8 million annually. Officials noted that while hotel tax revenue rebounded after the pandemic, collections have recently leveled off.

  • The city council is expected to provide further direction on March 3, 2026.
  • If the measures appear on the November 2026 ballot and are approved by voters, both tax increases would take effect January 1, 2027, aligning with the city's fiscal year 2027 budget process.

The players

Santa Barbara City Council

The governing body of the city of Santa Barbara, California, which is considering the proposed tax increases.

Santa Barbara Finance Department

The department that warned the city's reserves could be exhausted by the end of fiscal year 2028 without additional revenue or spending adjustments.

Visit Santa Barbara

The organization that is forming a task force to recruit festivals and events during slower periods to boost hotel occupancy and generate additional TOT revenue.

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What they’re saying

“Without additional revenue or spending adjustments, the city's reserves could be exhausted by the end of fiscal year 2028.”

— Santa Barbara Finance Department (edhat.com)

What’s next

The city council is expected to provide further direction on March 3, 2026. If the measures appear on the November 2026 ballot and are approved by voters, both tax increases would take effect January 1, 2027, aligning with the city's fiscal year 2027 budget process.

The takeaway

Santa Barbara's proposed tax hikes on property sales and hotel stays are an attempt to address growing budget deficits and avoid depleting the city's reserves. The measures will need to be approved by voters in November 2026 before taking effect in 2027, and the city is exploring ways to strengthen its revenue sources, including boosting hotel occupancy during slower periods.