Santa Clara County Sales Tax, Measure A, Pitched to Offset Deep Medicaid Cuts

The sun was just rising over Santa Clara Valley Medical Center when nurse Emiko Rivera arrived to begin her shift at the hospital’s burn center.

As one of the few certified burn centers in Northern California, Rivera’s team treats patients from across the region, caring for their wounds while also providing counseling and support to help them return to their jobs or schools.

“Our burn patients come in and sometimes are with us for months at a time with their injuries,” she said. “As a burn nurse, it is being with them day by day, being with their families, providing support in addition to providing their care and building those relationships so that we can have a successful recovery.”

Lately, a pall of uncertainty has spread over the sprawling Santa Clara Valley Medical Center campus. The One Big Beautiful Bill Act, signed by President Donald Trump in July, enacted historic cuts to Medicaid, the health care program for people with low incomes and disabilities. Medicaid — known as Medi-Cal in California — is the single largest revenue source for Santa Clara Valley Healthcare, the county health system that serves patients regardless of their ability to pay.

“The thing about burn injuries is that nobody is immune to a burn injury,” Rivera said. “It doesn’t matter if you are houseless or if you have millions of dollars. Everybody’s going to the same place, and that’s our burn center.”

For years, hospitals providing expensive emergency services to Medicaid patients have struggled to balance their books, especially in rural areas. But the latest federal cuts have spread the crisis to Silicon Valley, where local leaders are now asking voters to provide a lifeline in the form of Measure A, a sales tax increase on the ballot in November.

“This is the single largest revenue loss for the county organization, and therefore the services that we’re able to provide to the community, since the passage of Proposition 13,” Santa Clara County Executive James Williams told the Board of Supervisors in August.

The comparison to Proposition 13 is chilling for government finance officials. The 1978 ballot measure limited property tax increases and severely constricted local revenues. County leaders fear the Medicaid cuts could devastate California hospitals in the same way Proposition 13 decimated funding for the state’s public schools.

That’s especially true for public hospitals like Santa Clara Valley Medical Center. Facilities such as Zuckerberg San Francisco General Hospital and San Mateo Medical Center make up just 6% of hospitals in the state, but they operate more than half of California’s trauma and burn centers — and provide more than a third of hospital care for Medicaid patients or those without insurance, according to the California Association of Public Hospitals and Health Systems.

“The bottom line is this: Medicaid is the most significant revenue source for our health and hospital system,” Williams said.

After Williams’ warning, the Board of Supervisors voted unanimously to place Measure A on the Nov. 4 ballot.

The measure would raise the county sales tax by 0.625% for five years, bringing in an estimated $330 million annually. Supporters say that money is vital to avoid hospital closures, though it won’t make up for cuts projected to reach over $1 billion annually for Santa Clara County by the end of the decade.

Opponents of Measure A argue that the absence of federal support should force the county to re-evaluate whether it needs to operate four hospitals.

Federal cuts reverberate statewide

Across California, the Medicaid cuts are hitting struggling hospital systems.

Near Death Valley, the last hospital providing emergency care in southern Inyo County has run out of money. In Riverside, leaders of the Palo Verde Hospital recently filed for bankruptcy. And in Modoc County, the CEO of California’s smallest hospital, Surprise Valley Community Hospital, said its one emergency bed could close because of the cuts.

“There’s no magic way to print money to offset the federal government backing away from their promise to be a partner for those that are most fragile in our community,” said Graham Knaus, CEO of the California State Association of Counties. “It makes the whole system collapse, and that’s exactly what we’re starting to see — first in some of these rural areas, but it’s not going to be limited to those areas.”

The One Big Beautiful Bill Act, formally known as H.R. 1, requires adult Medicaid recipients to prove they are working, volunteering or going to school. County workers will have to process the new eligibility checks, adding workloads that could cost counties hundreds of millions of dollars annually, according to the California State Association of Counties.

If Medicaid recipients lose eligibility, as expected, counties such as Santa Clara will receive fewer direct payments and reimbursements for services. Additionally, the federal share of emergency services for certain undocumented adults without children will drop from 90% to 50%.

“That too will be upwards of a $200 million-plus cost shift,” Knaus said. “And in health settings where they’re barely making it today before all this is happening.”

He said many counties could backfill health care funding by cutting from other parts of their budgets. Other hospitals could limit services or close altogether.

A fight to keep hospitals open

In Santa Clara County, officials say Measure A is the only way to keep all four public hospitals and 13 clinics open.

“Other counties, their response to this — to close the budget gap — is to close down their hospitals, close down emergency departments,” Supervisor Betty Duong said. “This county cannot let that happen without a fight.”

Duong said cutbacks to Santa Clara Valley Healthcare could also strain private hospitals, which would suddenly face increased demand for emergency services.

Measure A has been endorsed by dozens of South Bay elected officials and labor groups.

The Yes on A campaign has raised over $2 million, with the largest contribution of $300,000 coming from SEIU 521, the union representing county health care workers. The Silicon Valley Community Foundation, developer and philanthropist John Sobrato, and the Valley Physicians Group have also each contributed more than $200,000.

Those donations have funded a campaign leaning into anti-Trump messaging. A recent Yes on A mailer declared, “Trump’s Cuts = Local Crisis.” Supporters hope turnout for Proposition 50, the redistricting measure also on the November ballot, boosts Democratic participation in reliably blue Santa Clara County.

“It is a chance for the residents of this county to say, ‘Hey, federal administration, we’re not going to take this lying down,’” Duong said.

Opponents question whether county leaders are bailing water out of a sinking ocean liner. Over the past six years, the county purchased three private hospitals on the brink of closure — O’Connor Hospital and Regional Medical Center in San José and St. Louise Regional Hospital in Gilroy — to prevent a loss of emergency access that would have sent patients streaming to Valley Medical Center.

But those purchases significantly ballooned county payroll costs, a Bay Area News Group analysis found. And the expansion was predicated on federal Medicaid funding that no longer exists.

“We need to decide — do we need all four hospitals?” said Cupertino Mayor Liang Chao, who opposes Measure A.

Chao said a sales tax increase will fall disproportionately on lower-income residents, and as a general-purpose tax, the revenue could technically be spent for any purpose.

“They are saying [Measure A] is targeted for health care, but it could be spent on anything,” Chao said. “So that’s kind of not very honest.”

The campaign against Measure A has not reported any financial contributions, but several former mayors — including Lydia Kou of Palo Alto, Rishi Kumar of Saratoga and Liz Lawler of Monte Sereno — have aligned against it.

“I think this is like a knee-jerk reaction to something happening in the federal government,” Chao said. “It’s kind of taking advantage of the federal cut as an excuse to tax the voters, rather than really looking at how do we solve a problem.”

Meanwhile, nearby hospitals are already buckling. Hazel Hawkins Memorial Hospital in San Benito is teetering after a private buyer backed away from a rescue deal, citing uncertainty in the wake of federal cuts. Williams, the Santa Clara County executive, predicts that could push more patients to Santa Clara’s hospitals.

At Valley Med, a $40 million burn unit expansion is underway to expand the unit from eight beds to 14. Rivera, the nurse, said she’s worried about how the cuts will affect the unit she has worked in for the last 17 years.

“There’s a lot of unknowns right now and uncertainty,” Rivera said. “But we will all be directly impacted in some way.”