SANTA CLARA COUNTY’S hospital lifeline sales tax increase won’t affect Silicon Valley residents equally.
The temporary five-eighths-cent increase, approved by voters last month as Measure A, will bring the sales tax rate to 10% or higher in three cities where voters have already approved existing local tax measures: Milpitas, Campbell and San Jose. Los Gatos residents will see their sales tax rate go from 9.25% to 9.875%. The county’s remaining 11 cities will go from 9.125% to 9.75%.
The sales tax increase will legally expire in 2031, unless county leaders opt to extend it before then.
Campbell will be one of the highest taxed of all California cities under Measure A, hitting the top 15% of all cities and counties, according to a review of statewide tax rates. The city already has the highest sales tax of all Santa Clara County cities at 9.875%. That won’t change under Measure A, which brings the city’s sales tax rate up to 10.5%.
It comes after Campbell voters in 2024 approved a half-cent sales tax increase to raise $7 million annually as part of an effort to assuage financial strain. A state bill enabled the city to hike its sales tax above the 9.25% state limit. The city is also dealing with a lawsuit over its own sales tax hike, which is tied up in the courts.
“People don’t love to give more of their money to taxes, but our community will do that if you can maintain trust and accountability and show where the money is going,” Campbell Mayor Sergio Lopez told San José Spotlight.
Dan Orloff has been a Campbell businessman since 1977 and previously served as president of the Chamber of Commerce. He said he understands quality of life comes at a price — but it’s important that customers and businesses are educated about why sales taxes are the way they are.
“I would encourage a methodical, well thought out campaign to keep customers informed,” Orloff told San José Spotlight.
The Measure A tax will apply to purchases of tangible retail items — such as vehicles, furniture, giftware, toys, antiques and clothing — at store locations within the borders of Santa Clara County. Groceries, prescription medicines, certain medical devices, children’s diapers and products purchased with EBT cards are exempt. Essential household expenses such as rent, utilities and child care are also exempt.
Whether Measure A applies to online purchases depends on certain situations. If the retailer has a physical location participating in the sale — and the sale is being shipped to or within California — local sales taxes apply.
“If there is no place of business that participates in the sale, then generally the transaction would be subject to a use tax, which is applied at the same rate as the sales tax, and is based on the location where the product is shipped,” a county spokesperson told San José Spotlight.
County leaders characterized Measure A as critical to their massive public hospital system, which they warn is at risk of falling apart amid unprecedented federal spending cuts. The ballot measure passed on Nov. 4 with support from 57% of voters.
Measure A is a general tax where spending is not restricted to a specific use. The county opted not to author Measure A as a special tax, which would have legally restricted funds to hospitals. Special taxes require 66.7% voter approval — a more difficult threshold to pass over an unusually short campaign cycle — whereas a general tax needs a simple majority.
Measure A became a socioeconomic referendum in Silicon Valley. Opponents argue this tax increase will hit low-income people hardest, while proponents argue such people need the county’s public hospital system, which is now California’s second largest. It’s a critical safety net service for the region’s publicly-insured and uninsured patients. But county doctors said hospital cuts would impact everyone, as people who lose coverage will turn to emergency departments, delaying critical care and ambulance transports at hospitals across the Bay Area. Santa Clara County hospitals already routinely reach capacity, dragging out wait times for care and appointments.
At the same time, the health and hospital system has become the county’s biggest focus and budget expense. County law enforcement officials and workers have long criticized the county for expanding the hospital system while asking their departments to make cuts under fiscal strain. The county’s law enforcement unions initially cast doubt on Measure A, and only endorsed it after saying they gained assurances from the county that their budgets would get a portion of the funds.
Yet in November, County Executive James Williams announced he would recommend the Board of Supervisors put all Measure A dollars toward offsetting federal health care cuts. That recommendation isn’t final and still needs approval from the county’s elected officials. Still, the proposal sent consternation through law enforcement interests — and District Attorney Jeff Rosen has threatened an investigation.
It comes as another state law change, Senate Bill 63, authorizes five Bay Area counties, including Santa Clara County, to ask voters to approve higher sales taxes to fill a public transit funding gap.
VTA’s board of directors in August voted to opt into that bill, which was signed and enacted in October, allowing them to place a half-cent sales tax increase on the November 2026 ballot.
If enacted, and factoring in Measure A, Santa Clara County would see a combined sales tax increase of 1.125% for four years, from 2027 through 2031.
Contact Brandon Pho at brandon@sanjosespotlight.com or @brandonphooo on X.
This story originally appeared in San José Spotlight.