Santa Clara County supervisors voted unanimously today to ask voters to approve new sales taxes that will place half the county in the double digit bracket. The higher taxes are needed to close a projected billion-dollar budget shortfall they say is the result of the federal government’s “Big Beautiful Bill.”
The countywide sales tax would rise to 9.75%. The sales tax would add $187.50 to the price of a $30,000 car, and $1.25 to a $200 non-exempt retail purchase.
The Santa Clara County Board of Supervisors held an emergency meeting Aug. 7 after Metro Silicon Valley reported that about 30% of the county’s budget is now compromised by cuts to federal healthcare programs like Medicare and Medicaid—distributed by the state as Medi-Cal.
County Executive James Williams forecast Thursday that county revenue will suffer a $1.3 billion loss by the 2029-30 fiscal year.
Williams said the county can collect more than $330 million over five years from the proposed five-eighths cent sales tax increase that will be placed on the November ballot.
About 70% of the county’s public healthcare system, which has expanded rapidly in recent years, is funded by Medicare and Medicaid.
“It is literally a reflection at a national level, in California and in our home county, of thousands of individuals who will lose health insurance coverage,” Williams said
“Some of the other significant impacts include what are called directed payments, supplemental payments in various programs that have existed to ensure continued access to services from hospital systems like ours—HR1 immediately froze any increases in those payments.”
Prop 35, passed by California voters in November to expand Medicaid funding, will no longer take effect as a result of the immediate impacts of HR1. State leaders need to fill in the financial gap for counties like Santa Clara, Williams said.
“HR1 has punched a huge hole in our safety net,” Board President Otto Lee said. “Our county operates four hospitals and dozens of clinics in addition to supporting community clinics.”
Medicare is a federal health insurance program benefiting people older than 65 along with younger people with disabilities, while Medicaid provides benefits to low-income adults and children. Medicaid is the single largest source of federal revenue for the County of Santa Clara, representing about $1.9 billion of its budget.
The county’s ‘Three-Pronged Approach’
Williams said his office developed a three-pronged approach to tackle the upcoming budget shortfalls—expanding partnerships with state leaders, reorganizing services within the hospital system and achieving voter approval of the sales tax measure.
As the Valley Healthcare System is the primary care provider for 1 in 4 county residents, multiple health workers turned up to Thursday’s meeting to warn county officials any substantial service cuts will compromise care quality.
District 4 Board Supervisor Susan Ellenberg voted to approve Lee’s motion to put the sales tax measure on the ballot Thursday before moving to public comment.
The approach will be necessary for Santa Clara County to sustain service levels at the 15-hospital and clinic Valley Healthcare System, but homeless and healthcare advocates say the proposed service reductions will put low-income residents in even more dire situations.
“These federal cuts could force the county to eliminate essential programs across every area that helps stabilize individuals and prevent homelessness, even before it starts, we urge you to move forward with the proposed sales tax,” said Destination: Home community outreach and education officer Esmeralda Virelas.
“We must explore any avenue for protecting these critical services.”
Williams said they would not discuss specifics on spending Thursday, but the board will return in October to discuss more details regarding the upcoming 2026-27 budget.
“This is very important to me that we make some kind of commitment today to our voters that we are going to make changes—significant changes to how we do our finances,” said District 5 Supervisor Margaret Abe-Koga.
