Santa Clara County supervisors voted unanimously Thursday to ask voters to approve new sales taxes that will place half the county in the double-digit bracket.
The sales tax increase will be on the Nov. 4 ballot. Thursday was the last day for items to be added to that ballot, which will also feature a special county election for County Assessor.
The sales tax increase needs only a simple majority of county voters to be enacted, because it is an unrestricted tax that can be spent for any county government purpose.
County officials said the higher taxes are needed to close a projected billion-dollar budget shortfall they say is the result of the federal government’s “Big Beautiful Bill.”
The countywide sales tax would rise to 9.75%, if the plan approved Thursday is approved by voters.
Purchases made in the cities of San Jose and Milpitas, which have city sales taxes as well, would have a 10% tax. Campbell businesses would collect 10.5%, the county’s highest rate, if the plan wins voter support. Consumers in Los Gatos would pay 9.875%.
The sales tax would add $187.50 to the price of a $30,000 car, and $1.25 to a $200 non-exempt retail purchase.
The Santa Clara County Board of Supervisors held a special meeting Aug. 7 after Metro Silicon Valley reported that about 30% of the county’s budget is now compromised by cuts to federal healthcare programs like Medicare and Medicaid—distributed by the state as Medi-Cal.
Santa Clara County Executive James Williams forecast Thursday that county revenue will suffer a $1.3 billion loss by the 2029-30 fiscal year.
Williams said the county can collect more than $330 million over five years from the proposed five-eighths-cent additional sales tax.
About 70% of the county’s public healthcare system, which has expanded rapidly in recent years, is funded by Medicare and Medicaid.
“It is literally a reflection at a national level, in California and in our home county, of thousands of individuals who will lose health insurance coverage,” Williams said
“Some of the other significant impacts include what are called directed payments, supplemental payments in various programs that have existed to ensure continued access to services from hospital systems like ours—HR1 one immediately froze any increases in those payments.”
Prop 35, passed by California voters in November to expand Medicaid funding, will no longer take effect as a result of the immediate impacts of HR1. State leaders need to fill in the financial gap for counties like Santa Clara, Williams said.
“HR1 has punched a huge hole in our safety net,” Board President Otto Lee said. “Our county operates four hospitals and dozens of clinics in addition to supporting community clinics.”
Medicare is a federal health insurance program benefiting people older than 65 along with younger people with disabilities, while Medicaid provides benefits to low-income adults and children. Medicaid is the single largest source of federal revenue for the County of Santa Clara, representing about $1.9 billion of its budget.
The County’s “Three-Pronged Approach”
Williams said his office developed a three-pronged approach to tackle the upcoming budget shortfalls—expanding partnerships with state leaders, reorganizing services within the hospital system and achieving voter approval of the sales tax measure.
As the Valley Healthcare System is the primary care provider for one in four county residents, multiple health workers turned up to Thursday’s meeting to warn county officials that any substantial service cuts will compromise care quality.
Williams said the approach will be necessary for Santa Clara County to sustain service levels at the 15-hospital and clinic Valley Healthcare System, but homeless and healthcare advocates say the proposed service reductions will put low-income residents in even more dire situations.
“These federal cuts could force the county to eliminate essential programs across every area that helps stabilize individuals and prevent homelessness, even before it starts, we urge you to move forward with the proposed sales tax,” said Destination: Home community outreach and education officer Esmeralda Virelas.
“We must explore any avenue for protecting these critical services,” she said.
Williams said they would not discuss specifics on spending Thursday, but said the supervisors would begin discussing details of the 2026-27 budget in October.
“This is very important to me that we make some kind of commitment today to our voters that we are going to make changes—significant changes to how we do our finances,” said District 5 Supervisor Margaret Abe-Koga.
The largest portion of the sales tax rate is a state levy of 7.25%. County governments – and many cities – add additional sales taxes. In the Bay Area, the current sales tax rates vary from a low of 8.625% in San Francisco to a high of 10.25% in Alameda County, where consumers buying products in four cities – Alameda, Albany, Newark and San Leandro – pay a 10.75% sales tax.
Current sales taxes in 65 California cities are at 10% or higher – 47 in Los Angeles County. The proposed new Santa Clara County property tax rate would match the current Los Angeles County rate.
Statewide, the city of Lancaster in Los Angeles County has the highest local sales tax rate, at 11.25%, according to the California Department of Tax and Revenue.
It remains to be seen whether other counties, facing the same Trump budget, will also be increasing taxes to avoid drastic cuts in services.
Barry Holtzclaw contributed to this report.
Reminder that the County of Santa Clara reportedly earmarked $8 million in this year’s fiscal budget specifically for illegal aliens. They are also currently spending money on a lawsuit against a church for defying their totalitarian Covid edicts. The Supervisors’ priorities are badly misplaced. They need to rework their budget to end dependency on federal handouts.
Not to mention, sales taxes are regressive, meaning the lower your income the greater proportion goes to pay the taxes. Same working poor the Supervisors caused to lose their in-person service jobs during Covid lockdowns while the Supes collected government paychecks at home with their laptops.
I vote no new taxes.
It was a special meeting, as the agenda says at the top, not an emergency meeting. But the agenda packet says according to Prop 218 the board needed to make a finding of an emergency in order to have a special election rather than a general election (in an even-numbered year).
Also, Supervisor Ellenberg didn’t vote before public comment; she simply seconded Board President Lee’s motion.
Where is the regional VTA tax, another .5% for them? Who else wants to jump on the tax bandwagon? Can we get the San Jose tax up to 11% or maybe 11.5%. Then lets toss some new assessments on property tax; schools, parks, roads, policy, water.
Let’s not forget the ever increasing utilities costs drive by the state, county and cities inability to ever say no to an increase.
Wait to see how fast people who can afford to move start moving.
I think it’s time for the county to cut costs, reduce spend, shrink staff. No new taxes, sales, property or otherwise.
The cost of living in the South Bay is going up, up and away.
Do not think the County Supervisors give a rat’s rear on increasing taxes.
Facilitating and enabling Homelessness, Illegal Aliens and providing Housing and free medical care for the world costs more than a pretty penny.
Who amongst us would deny Medical Care to our Neighbors, not me.
“Boot the Supes” out of office the next election cycles.
David S. Wall-Remember, our Nation is approaching $37 Trillion dollars of indebtedness.
Absolutely no. If anything, we demand they lower our taxes. No more handouts, no more bailouts, and for godsake no more bike lanes to nowhere. The party is over – spending is to be cut, and if they fake the results(which everyone knows theyll try) people should protest.
Back in 2021, the County of Santa Clara paid $76 million in bonuses to employees for working through Covid. That money could have been used to save for the proverbial rainy day.
No new taxes.
I can’t wait to move out of here and take my business with me. Taxes and city fees constantly going up, and evey year we get less in city services..
This is categorically NO from our household and friends. You have gone to the well too many times. Take money from other programs but no way am I voting for any more taxes. Use what you have wisely and don;t come knocking on my door.
Nah. I’ll pass on a tax increase. Cut what you need from the Medicaid budget. Done.
baaaaaaaaaaaaahahaha
ya’ll know sales taxes are regressive
Agrreed. No new taxes!!! Period
Good ol California TAX TAX TAX. It is ridiculous how incompetent the leadership is in this state, county city. Just spend spend spend on giveaways so illegals can stay and vote liberals into office. Shameful and EXACTLY why I will NEVER set foot in that retched state EVER AGAIN.
The worse things get the more taxes they need for their priorities. Gotta ask: Just what the hell are their priorities?
Last one out, get the lights…….
I oppose yet another sales tax increase.
We don’t need another regressive funding measure.
Our taxes are already too high.
Vote NO.
Why don’t the wealthy high rollers at MTC suggest taxing rich tech companies
and leave the little guy alone for a change? Why not a business tax?
Another regressive sales tax is a bad idea. All this nickel and diming contributes
into making the Bay Area a horribly expensive place to live; especially for people
of modest means, who must pay the greatest percentage of their income in these
regressive taxes and fees. Each increase by itself does not amount to much,
but the cumulative effect is to add to the unaffordability of the region.
Over the last several elections, voters have passed multiple regressive tax
and fee increases.