Cities gearing up for a fight against LA County’s one-half cent healthcare sales tax

A half-cent sales tax before LA County voters in June that attempts to backfill deep federal cuts to healthcare services faces growing opposition from dozens of cities and local anti-tax-watchdog groups who are expected to campaign against the measure.

Also, approving the Essential Services Restoration Act may be a precedent-setting move in that it places the burden on county residents and small businesses, forcing them to pay higher local sales taxes to counteract cuts in federal and state tax-supported programs.

“I think it is without precedent in my experience, when the federal government retrenches from obligations like healthcare, we backfill what the federal government ceases to fund,” said Zev Yaroslavsky, who served 19 years on the L.A. City Council and 20 years on the L.A. County Board of Supervisors before retiring in 2014.

Yaroslavsky, who said he’s not criticizing the LA County Board of Supervisors for placing the measure on the June 2 primary ballot, but merely pointing out the possible unintended consequences during an interview on Wednesday, Feb. 18.

“What we always considered is that we can’t backfill what the federal government does,” he said. “This is fraught with precedent issues,” he said. “Plus, once you do that, the federal government has an excuse and can say the local government will backfill it.”

Second District Supervisor Holly Mitchell, who led the successful motion on Feb. 10 that placed the measure on the ballot, said she saw no other way to stop the county from losing $2.4 billion in healthcare funding over the next three years. Federal cuts also affect 3.3 million low-income county residents who rely on federally funded Medi-Cal for healthcare services provided by the county, she said.

After looking at other options, a sales tax increase was the only one to counter the cuts from H.R.1, also known as the “Big Beautiful Bill,” adopted by Congress and signed by the president in July. The sales tax would raise about $1 billion annually and sunsets after five years, in 2031.

“From my perspective, there is no other option for LA County to close a $2.4 billion gap from H.R.1,” Mitchell said.

The ballot measure includes a spending plan that will pump money back into county clinics, hospitals, emergency departments as well as hundreds of nonprofit medical clinics that would otherwise lose funds and patients who get cut off from the federal-state funded Medi-Cal. Also, the cuts put 64,000 jobs at risk, according to the county.

The county hospitals and clinics are facing loss of funds that will reduce staffing, close county clinics and possibly some county hospitals, while overcrowding public and private emergency rooms, said Dr. Christine Ghaly, executive director of the county Department of Health Services.

Many cities are opposed

The California Contract Cities Association, which has 73 member cities from LA County, wrote a letter to the Board opposing placement on the ballot. CCCA’s CEO Marcel Rodarte, in his letter, cited several factors why the cities are opposed.

First, they are concerned that with most LA County cities already at 10.5% or 10.75%, passage would raise their city sales tax to 11% or 11.25%, a psychological hurdle that may affect passage of any future city-initiated sales tax raises. “Cities said if we wanted to do our own sales tax measure (increase), this makes it more difficult for cities,” Rodarte said on Wednesday, Feb. 18.

The county sales tax is 9.75%, but cities, schools and transit agencies stack on top of that. Also, the state has a cap on sales taxes. The remaining cap is 1%, the county reported. To free up cities for future sales tax measures above the cap, the county is working with several legislators who’ve written legislation that exempts cities from the cap.

Others fear that in LA cities near Orange County, Ventura County or San Bernardino County, shoppers of large-ticket items such as cars would go across the county border to save hundreds of dollars on taxes.

“If this motion passes and pushed the tax rate to such a high level, cities, especially those along the border of Orange County, can expect to see many people to spend their hard-earned dollars in cities with lower sales tax rates,” wrote the city of Norwalk in its opposition letter, signed by all five members of the City Council.

Another argument is affordability.

“We are concerned this measure would disproportionately burden the very residents the County seeks to protect, who are facing historic affordability pressures on housing, food, fuel, utilities and childcare costs,” wrote Rodarte.

Jim Mangia, CEO and president of St. John’s Community Health, has been the leader of a coalition of nonprofit clinics, physicians groups and county employees unions supporting the measure. His nonprofit provides medical, dental and mental health services to 144,000 patients a year at 25 clinic sites in LA County.

He called cities short-sighted, saying a sales tax increase that will cost $5 per month for a family of four, and excludes groceries and prescription drugs, is worth the price of saving healthcare for their needy residents. In Norwalk, 23% of that city’s residents will lose their healthcare, he said.

“If you are talking about the question of affordability, one of the largest is healthcare costs,” he said on Tuesday, Feb. 17 in an interview.

General vs Special tax

Cities from Glendale to Pico Rivera argue that the sales tax measure is incorrectly listed as a general tax. The money would flow into the county’s general fund. That means, the delivery of dollars could go elsewhere if there’s a change of direction from the Board or money needed for a different emergency.

Rodarte said many cities wanted the measure to be a special tax, to better ensure that monies would go to specific healthcare services. But a special tax requires a two-thirds vote, and a general tax only requires a majority vote for passage.

Polls done by supporters show 58% in favor, Mangia said.

“A special tax would’ve protected taxpayers because the county could only use it as presented on the ballot, that is, to supplement healthcare clinics,” Rodarte said. He said the special tax designation would “put guardrails on the revenue.”

Mangia said the general vs. special tax argument is false. He said the cities true motivation is about enacting their own higher sales taxes, producing more targeted revenue for city programs. He said protections are in place for the dollars to go toward helping clinics and county healthcare services used by low-income residents throughout LA County.

“The Board of Supervisors put the measure on the ballot and adopted a spending plan that locks in how that money will be allocated and spent. It is very transparent,” Mangia said. He said there are at least a hundred organizations, from healthcare providers to healthcare employees, health services directors and labor unions at the county who will be watching spending audits and will make sure the money is spent accordingly.

City of Azusa Mayor Edward Alvarez wrote in a letter to the Board that their approach was “not a responsible or accountable solution,” a sign of distrust.

Alvarez points to the previous Measure A, a November 2024 general, one-half-cent sale tax approved by voters for homeless services and new affordable housing. In his opposition letter, Alvarez wrote the city of Azusa taxpayers generate $5 million per year from Measure A, but the city is projected to receive less than 6%.

“Meanwhile substantial funding is absorbed at the county level, even as cities shoulder the impacts of the homelessness crisis,” he wrote.

Nearby San Gabriel Valley city of La Verne also said the city would not get its fair share from the new tax. “While La Verne residents and businesses would bear the financial burden of this countywide sales tax, the structure of the measure provides no mechanism to ensure that funds are returned to communities in proportion to their contribution,” wrote Mayor Tim Hepburn in a letter urging the Board to scrap the measure.

Glendora Mayor David Fredendall, in his letter of opposition, hinted that the city may work with like-minded groups to oppose the measure.

“Glendora intends to work collaboratively with other cities, councils of governments, regional associations, and partner organizations to oppose this effort,” he wrote.

Jon Coupal, president of the Howard Jarvis Taxpayers Association, said the affordability aspect is important to cities. “A sales tax is a highly regressive tax and that falls harder on the middle class, working class and lower income people,” he said. The cities’ strong objections could cause his group to reach out to them for help with an opposition message.

He said usually cities and his organization are on opposite sides. This time, they may work together. “Politically it will make for interesting bedfellows,” Coupal said.

Alternative solutions?

Norwalk suggests since the federal cuts affect the entire state, that the state Legislature should act. A state tax on 40 million residents would cost less than an LA County tax. “The Board of Supervisors should consider working with state legislators to implement a statewide tax to handle this statewide problem,” wrote the members of the City Council.

Supporters of a so-called “billionaires tax” are collecting signatures for a spot on the November ballot. Sen. Bernie Sanders, I-Vermont, recently campaigned for the statewide tax at a rally in Los Angeles. The 2026 Billionaire Tax Act, Initiative No. 25-0024, would impose a one-time 5% excise tax on individuals with a net worth exceeding $1 billion.

Supporters say the tax could produce about $100 billion, which would help offset $30 billion the state is anticipated to lose in federal Medicaid-MediCal funds, according to a report from Cal Matters.

If the LA County measure passes in June, and the billionaires tax is approved in November, will that mean the county will rescind their tax? asked Rodarte. “There are a whole bunch of questions in the air,” he added.

Pico Rivera Mayor Gustavo Camacho, whose city opposes the measure, said the county should look at other ways to refill healthcare funds. “The federal government should go back and backfill this,” he said.

“Is he serious?” Mangia reacted. “Let’s be real here. Do you think you’d have an opportunity with Congress and the president? They are the same people who voted to cut it.”

He said if cities fight this measure, his coalition, named Restore Healthcare For Angelenos, will have the will and means to fight back.

Already other counties such as San Diego and Alameda are looking into a similar tax, he said. And voters in Santa Clara County in November approved a measure to raise local sales taxes by five-eights of a cent (0.625%) for five years to raise funds for healthcare. The measure was approved by 57% of voters.

Mangia said his coalition is already doing additional polling and sharpening its message. And if the LA County measure passes, he hopes it serves as a model for more counties to do the same.

“We feel confident but we will have to work at it,” he said. “We are starting from the vantage point of making sure children and families do not lose their health coverage. I can’t think of an issue more worth fighting for,” he said.