How Santa Barbara’s Fiscal Strategy Supports Essential Services While Looking Toward the Future

Located on California’s Central Coast, the City of Santa Barbara is a full-service municipality that provides a broad range of essential services directly to residents. Led by Finance Director Keith DeMartini, the Santa Barbara Finance Department supports municipal operations through five core divisions: accounting, risk management, purchasing, budget, and treasury/revenue collection.  

Amid rising service expectations, budget constraints, and the limitations of manual processes, the Finance Department set out to improve the way staff work and serve the local community. In 2023, they revamped tax administration, launching an online portal for business tax certificates and expanding compliance support across multiple tax streams, including sales tax, utility users tax, and franchise fees. 

The City is taking a balanced approach to managing resources and planning for the future. Efforts to modernize systems help support core community services—such as public safety, libraries, and parks and recreation—while strengthening long-term fiscal resilience.

Santa Barbara’s Finance Department oversees all aspects of the City’s financial operations, including tax collection, budgeting, accounting, and risk management. With more than 16,000 registered businesses, the department was tasked with maintaining service standards while managing persistent budget constraints.

Like other California municipalities, Santa Barbara operates under the limitations of Proposition 13, a 1978 ballot initiative that capped property tax growth. This means locally collected revenues, such as business (license) taxes, utility users taxes (UUT), transient occupancy taxes, and franchise fees, have become increasingly important to funding core services.

Yet many of the City’s key processes, including business tax certificate renewals, were paper-based. The challenge was that processing filings and accounting for payments fell to the same team that was also tasked with managing audits and enforcing compliance consistently. As operational demands grew, the need for a more efficient and sustainable approach became increasingly urgent.

In response to the operational and budgetary challenges, Santa Barbara partnered with Neumo to ensure full collections and to ease the accounting and compliance auditing burden.

Santa Barbara rolled out a 24/7 online portal for business tax certificate applications and renewals, with credit and debit card payment options. They also partnered with Neumo to provide audit and compliance management for business tax, sales tax, UUT, and franchise fees.

The company’s expertise in complex tax structures and municipal compliance was a key factor in the decision. The finance team was finally in a position to focus on providing more strategic and analytic work, and better serve the community, according to DeMartini.

In January 2023, Santa Barbara announced the launch of the system and added instructional resources to the website to guide residents through the new process.

The first year involved change and adjustment as businesses transitioned to the new system, but today, the majority complete their renewals in just a few minutes. Feedback has been positive, with business owners saying filing is easier and faster, and that electronic payment options are a welcome improvement.

A 24/7 Self-Service Portal for Residents

The business portal provides taxpayers with greater flexibility to complete tasks and gives them the option to use a variety of payment methods. When the system first launched, only 40-50% of businesses were filing online, but as users became more familiar with the new process, the number jumped to 90% the following year. Today, 86% of all businesses are using the online system.

Smarter Processes With Fewer Resources

Without having to process thousands of transactions internally, the department did not backfill a staff position after a retirement, saving payroll costs, and staff were able to move to higher-value work such as reconciliation, financial planning, and performance analysis. Reliable audit support and regular metric reviews have helped prevent oversight and identify new opportunities for process improvements.

Reinvesting in the Community

Efficiency gains also impact community initiatives, with revenue allocated to capital projects, including a new police station, park upgrades, and the renovation of the Michael Towbes Library Plaza in Santa Barbara’s Cultural Arts District. These investments reflect one of Santa Barbara’s broader fiscal strategies: delivering meaningful, visible improvements within the community.

As part of its long-term strategy for budget resilience, the Finance Department is taking a balanced approach that includes both increasing revenue and controlling costs. These efforts, combined with improved operational efficiency, are essential to sustaining services without overburdening taxpayers.

Additionally, Santa Barbara is leading a statewide initiative to classify digital streaming as a taxable utility, which could shape the future of municipal revenue policy in California. In continuing to evaluate tax policy and expand digital infrastructure, Santa Barbara is well-positioned to deliver modern services that support the City’s fiscal health and long-term community priorities.