Santa Clara County Voters Could Pay More Sales Tax Due to Trump Cuts

Updated 4:27 p.m. Thursday

Santa Clara County leaders voted Thursday to rush a sales tax measure onto a November special election ballot to help fill major funding holes created by devastating federal cuts.

The Board of Supervisors Thursday unanimously decided to ask voters to approve a sales tax increase of five-eighths of a cent for five years, which officials expect would raise about $330 million annually to shore up the county’s general fund budget.

In November, Santa Clara County voters will already have a special election to select a new county assessor to fill out the remainder of Larry Stone’s term, who retired last month. The supervisors’ vote on Thursday means the sales tax measure will be placed on that same special election ballot.

If approved by voters, the measure would add 0.625% to sales tax everywhere in the county beginning in April 2026. The tax rate is currently 9.125% in the county overall, but is higher in cities within the county where other tax measures have been approved locally. For example, San José’s current tax rate is 9.375%.

Officials say the county, which has already been dealing with budget deficits of hundreds of millions of dollars, is expecting to lose more than $1 billion in state and federal funding over the next few years due to the passage of H.R. 1 — known as the “Big Beautiful Bill” — President Donald Trump’s wide-ranging legislation that provides tax cuts for wealthy and slashes safety net programs supporting health care and food assistance.

Otto Lee, the president of the board of supervisors, told KQED ahead of the vote that the magnitude of the federal cuts leaves the county with no other option but to ask voters to tax themselves to help raise revenue.

“The proverbial words are, ‘Hey, let’s cut the fat first,’ right? Well, we’ve been doing that for a couple of years now. At this point, we are already cutting the meat,” Lee said.

“What we are facing in front of us with H.R.1, that some call the big ugly bill from Congress, is something that in many ways is really self-inflicted cruelty and chaos.”

County leaders say the additional sales tax revenue is badly needed to help support the county’s health care system, Santa Clara Valley Healthcare, which includes four hospitals and 15 clinics that collectively serve about one of every four county residents.

The system is the main provider of healthcare services for lower-income people enrolled in Medi-Cal, the state’s version of the federal Medicaid insurance program, and also the largest provider of hospital services to patients with Medicare, the federal insurance program for people age 65 and older.

Under H.R. 1, Medicaid will see a cut of roughly $1 trillion over a decade, in large part due to eligibility changes that could force many who receive such benefits off their coverage.

Santa Clara County CEO James Williams made his case for the sales tax measure during Thursday’s board meeting, saying the federal cuts represent an “extraordinary loss of revenue” for the county’s work in providing care to thousands of people.

“This strategy will help give us a little breathing room,” he said.

“It’s also a tangible and concrete way for us to say we will not just sit idly by as the federal government pulls the rug out from critical access to core services, but that we will together, and in a multifaceted effort, bring the pieces of our community in alignment to ensure that the things that make Santa Clara County special continue,” he added.

The county has already cut many vacant positions and implemented a hiring freeze to reduce its deficits, in part caused by the slow growth of its property tax funds. But Lee said without help from an additional sales tax measure, the federal cuts put the county in a “dire” situation.

“What we’re talking about is not just cutting to the bone or bone marrow. If you continue with this type of cut, people will be harmed seriously,” Lee said. “I would say it’s like cutting off the limb is what we’ll be having to do, like closing clinics, closing hospitals.”

Estimates from a county staff report say the tax measure would fill about a third of the estimated funding gap from the federal cuts, and would stave off the “harshest impacts of that law on county services.”

However, even with the additional funds, the county will still need to seek help from the state to help cover cuts to programs like CalFresh, the state’s food stamps program, and will need to continue to make budget cuts to county programs, including potentially laying off staff.

The cuts from the Trump administration and Congress pose a “major risk to all county services, from public safety to homeless services, since programs directly funded by Medi-Cal will be unable to absorb this level of cuts on their own,” the county report said.

“The reality is that every resident in our community will feel the consequences of these devastating federal funding cuts,” Supervisor Susan Ellenberg said during the meeting.

“We cannot afford to sit back and tell ourselves that it won’t be that bad, because believe me, it will be for all of us,” she said. “And while no one is excited about new taxes, particularly in this volatile time, my view is that this is a direct and necessary response to the enormous threats to a vast array of county services, both direct and indirect.”

Sales tax measures are generally debated and discussed in multiple public meetings over weeks or months, before elected leaders vote on whether to put one on a ballot. In the case of the current proposal, supervisors did it all in one hastily called meeting.

Lee said many people in the county may be wary with a potential recession looming, along with impacts from inflation and federal tariffs. But with the federal budget cuts “punching this hole in our public safety net,” he hopes voters will support the sales tax measure on their ballot.

“I want people to understand how big this is,” he said. “This affects everybody.”