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The Medicaid cuts in President Trump’s “Big Beautiful Bill” will squeeze Santa Clara County health care funding. But raising local taxes is not the solution.
Instead, county supervisors should stem their rapidly escalating spending, which has doubled in the past eight years and ranks highest per capita by far of the 10 largest California counties.
And voters should reject Measure A, the five-year sales tax increase on the Nov. 4 special election ballot that has been in the planning stages since long before Trump won reelection.
The measure would add another five-eighths of a cent to each dollar of taxable goods, pushing the total rate to 10% or more in most of the county.
State data indicates that the average person in the county currently pays at least $1,700 a year in sales tax, which is distributed between state and local governments. Measure A would increase that by at least $113 annually.
Raising taxes before imposing long-overdue fiscal discipline puts the cart before the horse. While Measure A would expire in 2031, we expect it would be permanently built into the county budget by then and county officials would be begging for an extension to avoid cuts.
Soaring spending
There’s no question that the county will take a hit from the Trump Medicaid cuts. And there’s no denying the importance of county health services, which treat 40% of county residents and deliver 80% of trauma care. But it’s important to put county spending, the federal funding reductions and Measure A in context.
County spending has increased from $6.4 billion in the 2017-18 fiscal year to $13 billion in 2025-26. The biggest cause of that increase has been health care, which includes public health, mental health and, most significantly, Santa Clara Valley Healthcare’s network of hospitals and clinics.
The county, which already ran Santa Clara Valley Medical Center in San Jose, rescued O’Connor Hospital in San Jose and Saint Louise Regional Hospital in Gilroy from bankruptcy in 2019, and purchased Regional Medical Center in San Jose in 2025. The county now operates a much larger health care system per-capita than any other California county, says County Executive James Williams.
PRO/CON: Measure A would increase Santa Clara County sales tax. Is it worth it?
Suddenly running four hospitals instead of one, the county found losses for its hospitals and clinics increased from about $97 million in 2017-18 to $532 million expected in the current fiscal year. That forecast was before Trump’s budget bill exacerbated the shortfall.
While we supported the 2019 hospital purchases, we never intended that to be a blank check. Clearly a major reorganization to cut costs and find savings through economies of scale has been needed for years. Instead, the county has increased fourfold the subsidies from the general fund — from money that would otherwise go to other county services.
The greatest concern from the federal budget is the cut to Medicaid, known as Medi-Cal in California, which serves primarily low-income and disabled residents. Forty-six percent of patients in the county’s health care system are covered by Medi-Cal, which accounts for about half of the revenue.
Santa Clara County officials forecast the cuts in Trump’s bill will cost the county $223 million in the current fiscal year, escalating to $1.3 billion by 2029-30. That’s significant pain.
But what’s important here is that the proposed sales tax increase would only solve a fraction of the problem. Measure A is expected to raise $330 million annually. There is no plan for how the county would address the rest of the shortfall over the next five years.
Regressive tax
While the ballot wording of Measure A says it could be used for a variety of purposes — to “support critical local services such as trauma, emergency room, mental health, and public safety” — Williams says the money would be used solely to shore up the health care system.
Measure A is a “general” tax, meaning that county supervisors have the discretion to spend the money on any legally permissible county services — and that the measure only requires majority approval. Had county supervisors instead sought a “special” tax, restricting the use of the money to a specific purpose, the measure would have required two-thirds approval.
Sales taxes are regressive, meaning they disproportionately impact those who can afford it least. In Santa Clara County, the levy on taxable goods, which excludes prescription medications and most groceries, would increase to at least 9.75%, with higher rates in Los Gatos (9.875%), San Jose (10%), Milpitas (10%) and Campbell (10.5%).
For example, in San Jose, home to about half the county’s residents, the sales tax is currently 9.375%, meaning a consumer pays an additional $9.38 on a $100 purchase. If Measure A passes, the tax would add another 62 cents, making the total sales tax $10 for that same $100 purchase.
For homeowners in the county, that would come on top of property tax levies that are based on assessed value. For example, for a home assessed at $1.5 million, the county collects $2,700 annually as its share of the 1% base tax, plus special levies for county employee pensions ($570) and to pay off voter-approved county bonds for affordable housing ($84) and hospital seismic improvements ($78).
Tax history
The only reason Santa Clara County leaders were able so quickly to place the sales tax measure on the same ballot as Proposition 50, the statewide redistricting measure, is that they had been working on the tax increase for two years, long before Trump’s return to office.
In 2023, at the urging of county officials, Sen. Dave Cortese, D-San Jose, pushed through state legislation enabling Santa Clara County supervisors to seek voter approval for the sales tax increase. At the time, Cortese argued the tax was needed to address significant and growing budget challenges.
The legislation limited the increase to five-eighths of a cent. If not for that limit, Williams told us, he would have recommended the board place a larger sales tax increase on the ballot.
Which is exactly the sort of thinking that concerns us. In 2023, according to data from the state Controller’s Office, Santa Clara County spent $5,046 per resident, at least 19% more than any of the nine other California counties with at least 1 million residents, and more than double San Diego, Orange, Alameda and Fresno counties.
Before asking residents for more tax money, county officials should find a way to spend what they have more efficiently.
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Mercury News Editorial
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