In response to recent federal legislation that cuts billions of dollars to Medicaid, Santa Clara County supervisors on Thursday unanimously voted to add a ballot measure to November’s special election that would increase local sales tax by five-eighths of a cent (0.625%) for five years to try to backfill some of the projected lost federal revenue.
The federal legislation HR 1 was passed by Congress and signed into law by President Trump in July. It includes the biggest cuts to Medicaid, the joint federal-state health insurance program for low-income Americans, in the program’s history. These cuts are expected to lead to devastating reductions in critical medical services, especially at public hospitals that rely primarily on Medicaid reimbursement, and to people losing access to benefits and care.
Santa Clara County’s effort to raise local sales tax for this purpose appears to be one of the first such actions by a local jurisdiction to fill the gap in health care funding created by HR 1.
If approved, the sales tax would generate an estimated $330 million a year, a fraction of the roughly $1 billion in estimated loss of federal funding over the next few years. It would take effect April 1 and help fund health services, including the county’s four public hospitals and 15 clinics.
The current countywide sales tax rate is 9.125%; it would go up 0.625% to 9.75% if the measure passes.
Some cities in the county have higher tax rates, such as San Jose (9.375%) and Campbell (9.875%). In those places, the tax would go up 0.625%.
“We cannot afford to sit back and tell ourselves it won’t be that bad because it will, for all of us,” said Supervisor Susan Ellenberg. “While no one is excited about new taxes, particularly in this volatile time, my view is this is a direct and necessary response to the enormous threats to a vast array of county services.”
The special election, to be held Nov. 4, was called to replace county Assessor Larry Stone, who stepped down in July. The county said the special election presented a unique opportunity to put the sales tax measure before voters quickly, since waiting until the regular election in November 2026 would increase the potential harm from the Medicaid cuts.