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HomeMy WebLinkAbout2026-05-12 - AGENDA REPORTS - MEASURE ER - ESSENTIAL SERVICES RESTORATION ACT (LACO)O Agenda Item: 2 CITY OF SANTA CLARITA W AGENDA REPORT NEW BUSINESS CITY MANAGER APPROVAL: DATE: May 12, 2026 SUBJECT: MEASURE ER: THE ESSENTIAL SERVICES RESTORATION ACT FOR LOS ANGELES COUNTY DEPARTMENT: City Manager's Office PRESENTER: Masis Hagobian RECOMMENDED ACTION City Council discuss and provide direction to staff. BACKGROUND The Essential Services Restoration Act for Los Angeles County (Measure ER) is a one-half percent (0.5%) general sales tax that was placed on the June 2, 2026, ballot by the Los Angeles County (County) Board of Supervisors. The motion to place the measure on the ballot was introduced by Supervisors Holly Mitchell and Hilda Solis and was approved (4-1), with Supervisor Kathryn Barger voting no. If approved by a simple majority of County voters, Measure ER would go into effect on October 1, 2026, and sunset on October 1, 2031. Measure ER was presented to the City Council Legislative Committee on April 28, 2026. The City Council Legislative Committee expressed concerns related to the proposed increase to the sales tax rate and potential impacts to overall affordability throughout the County. As described in the motion, the intent of the measure is to support County healthcare services that have recently lost federal funding as a result of the passage of House Resolution 1 (2025) (H.R. 1), also known as the "One Big Beautiful Bill Act." The County projects a revenue loss of approximately $2.4 billion over the next three years due to a cumulative fiscal impact of federal laws and policies imposed since January 2025, including H.R. 1, Executive Orders on grant oversight, and new federal terms and conditions restrictions. The County Department of Health Services is projecting federal revenue loss exceeding $700 million per year by 2028-29 as a result of the federal impact of H.R. 1. Additionally, the County Department of Public Health is forecasting a $42 million deficit in fiscal year 2025-26 and anticipates losing $200-300 million in the next three years due to H.R. 1. Page 1 Packet Pg. 17 O This measure establishes a nine -member citizens oversight committee and requires an independent auditor to prepare a report for each year until all funds are expended. The County anticipates the measure to generate $1 billion, annually. The current sales tax in the City of Santa Clarita (City) is 9.75 percent. If this measure were to pass, the City's sales tax would become 10.25 percent. A higher sales tax rate, especially in comparison to neighboring cities in other counties with a significantly lower sales tax rate, may create a competitive disadvantage for Santa Clarita businesses. Currently, the City of Fillmore has a sales tax rate of 7.25 percent and the sales tax rate in the City of Bakersfield is 8.25 percent. Supporters: Community Clinic Association of Los Angeles County SEW 721 and 2015 St. John's Community Health Planned Parenthood Advocacy Project LA County Health Justice Action Fund Opponents: California Contract Cities Association City of Palmdale City of Rancho Palos Verdes Los Angeles County Taxpayers Association ALTERNATIVE ACTION Other action as determined by the City Council. FISCAL IMPACT There is no fiscal impact as a result of this item. ATTACHMENTS Measure ER - Resolution Text Page 2 Packet Pg. 18 2.a RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF LOS ANGELES PROVIDING FOR AND GIVING NOTICE OF AN ELECTION ON A GENERAL COUNTYWIDE TRANSACTIONS AND USE (SALES) TAX MEASURE TO BE HELD IN THE COUNTY OF LOS ANGELES ON JUNE 2, 2026, AND CONSOLIDATING THE SPECIAL ELECTION WITH THE STATEWIDE PRIMARY ELECTION TO BE HELD ON JUNE 2, 2026 WHEREAS, the County of Los Angeles (County) relies on federal funding to support the delivery of vital services to the public, including health care, food assistance, social services, public health programs, child welfare services, housing, public safety, and other services critical for the health and safety of the public. WHEREAS, 3.3 million County residents (one in three) rely on Medi-Cal for healthcare coverage and almost 1.5 million County residents rely on the Supplemental Nutrition and Assistance Program (SNAP) (called CalFresh in California) for nutritional w needs. L ° N WHEREAS, on July 4, 2025, H.R. 1, also known as the "One Big Beautiful Bill Act," was signed into federal law. This law imposes, among other cuts to public -- services, extensive reductions in federal support for Medicaid and SNAP and may cause hundreds of thousands of County residents who rely on Medi-Cal to lose coverage and face reduced access to care. It could result in overcrowding of emergency ° rooms when residents are unable to get any health care until they are experiencing a o life -threatening crisis. WHEREAS, the cumulative fiscal impact of federal laws and policies imposed since January 20, 2025, including H.R. 1, Executive Orders on grant oversight, and new federal terms and conditions restrictions, has led the County's most impacted departments to project revenue losses totaling $2.4 billion over the next three years, which may result in hiring freezes, service reductions, potential layoffs of 5,000 staff, and facility closures in the coming years. WHEREAS, federal funding cuts could affect public health services like chronic disease prevention, disease tracking, and water safety, as well as the health care provided at the County's four public hospitals, numerous clinics, partner non-profit safety net hospitals and community health centers, and these cuts will disproportionately affect low-income families and target health care and public health providers. WHEREAS, proposed reductions at both the federal and State levels are expected to significantly affect Medicaid (Medi-Cal), which is a primary revenue source for the Department of Health Services (DHS). In just four months following H.R. 1's signing, the County lost an average of 1,000 people per day from Medi-Cal enrollment — over 120,000 people between July and November 2025. During the same four -month period, more than 27,000 children under 18 lost their Medi-Cal coverage, equating to nearly 200 children per day. HOA.105763538.16 Packet Pg. 19 2.a WHEREAS, from July 2025 to November 2025, since H.R. 1's signing, over 70,000 County residents were dropped from CalFresh enrollment — including almost 27,000 children under 18. WHEREAS, this funding and coverage loss will cause a serious threat to the long-term sustainability of critical safety net services relied upon by County residents. DHS, for example, needs to absorb a projected federal revenue loss exceeding $700 million per year. WHEREAS, the Department of Public Health (DPH) is projecting a $200-300 million loss in federal and State funds. DPH is forecasting a minimum $42 million deficit in fiscal year 2025-26, requiring various clinic closures, service reductions, personnel reassignments, and possible terminations. This deficit will likely worsen given cuts to federal revenue. WHEREAS, Medicaid is the single largest source of revenue for Los Angeles a County's health departments, including the 23 health centers and four acute care N hospitals run by the County and many non-profit safety -net facilities that provide irreplaceable life-saving services for residents of Los Angeles County. -- WHEREAS, many key provisions of H.R. 1 took effect immediately, including the prohibition on new provider taxes, which effectively negates Proposition 35 that voters approved in November 2024 and that would have extended the State's managed care organization (MCO) tax and provided needed support to the Medi-Cal program while also providing dedicated funding to public hospitals which was assumed in the current State and County budgets for the current fiscal year. WHEREAS, H.R. 1 immediately freezes supplemental Medicaid funding and prevents the Los Angeles County health departments from being able to draw down expected and needed supplemental Medicaid payments causing a significant negative impact on the County budget immediately and escalating over time. WHEREAS, the County will be required to provide certain health care and human services funded with revenue from the County's General Fund which will directly impact the County's ability to provide other vital services to County residents, including, but not limited to, social services, supportive services for unhoused residents, and public safety. WHEREAS, pursuant to Parts 1.6 and 1.7 of Division 2 of the Revenue and Taxation Code, the County is authorized to impose a retail transactions and use (sales) tax in the incorporated and unincorporated territory of the County for general purposes, including health care and human services, at a rate of one-half percent (0.5%). WHEREAS, section 2 of article XIIIC of the California Constitution, sections 53721-53724 of the California Government Code, and Part 1.6 of Division 2 of the California Revenue and Taxation Code authorize the County of Los Angeles to levy, HOA.105763538.16 Packet Pg. 20 2.a increase, or extend a general sales tax upon two-thirds vote of the Board of Supervisors and a majority vote of the electorate. WHEREAS, the Board of Supervisors desires to levy a general sales tax at the rate of one-half percent (0.5 %), effective as of October 1, 2026, to continue for a period of five years. WHEREAS, pursuant to article XIII C, section 2(b) of the Constitution and California Government Code section 53724(c), an election for the approval of a temporary general sales tax must be consolidated with a regularly scheduled general election for members of the governing body of the local government. WHEREAS, the County's regularly scheduled elections are held on the same day as the statewide primary election in each even -numbered year, and the next regularly scheduled election for members of the Board of Supervisors and the next statewide w primary election will be held on Tuesday, June 2, 2026. L N WHEREAS, the Board of Supervisors deems it necessary, essential, and in the public interest to submit the sales tax measure to the qualified voters within the County at an election to be held on June 2, 2026, and to consolidate such election with the other elections to be held on that date. ~ WHEREAS, the tax revenues from this general sales tax levy would partly offset reductions in federal support imposed by H.R. 1 and help the County to continue to provide vital services, including health care and human services to the public. WHEREAS, voter approval of this ordinance will not affect the County's existing sales taxes, which will continue to be levied. WHEREAS, to promote accountability and transparency, this ordinance provides for the creation of a citizens' oversight committee that will review the receipt and expenditures of the revenues from the general sales tax and provide annual reporting of the committee's review at a public meeting. NOW, THEREFORE BE IT RESOLVED by the Board of Supervisors of the County of Los Angeles that: Section 1. Call of the Election and Purpose. An election shall be held and the same is hereby called and ordered to be held in the County on the 2nd day of June 2026, for the purpose of submitting to the voters: (1) the ordinance attached hereto as Exhibit A and incorporated herein (Ordinance) by this reference, which was approved by two-thirds vote of the Board of Supervisors. The Ordinance shall become effective if a majority of the qualified voters of the County of Los Angeles voting on the Ordinance measure set forth in Section 2, below, vote in favor of the measure. HOA.105763538.16 Packet Pg. 21 2.a Section 2. Ballot Measure. Pursuant to Elections Code section 10403, the measure shall appear on the ballot substantially as follows: Essential Services Restoration Act for Los Angeles County General Sales Tax Measure Shall the measure to help our community address severe federal cuts enacted by the President and Congress; reduce the loss of essential Yes services, including healthcare for County residents; reduce the risk of closing the County's four public hospitals and numerous clinics, and significant healthcare provider layoffs and other service cuts by No enacting a 1 /2 percent (0.5%) general sales tax for 5 years, generating approximately $1 billion annually, with independent audits, be adopted? Section 3. Proclamation. Pursuant to section 12001 of the Elections Code, the W w Board of Supervisors of the County of Los Angeles hereby PROCLAIMS that an L election shall be held in the County on Tuesday, June 2, 2026, to vote upon the measure. Section 4. Election Procedure. All qualified voters residing within the County shall be permitted to vote in the election and in all particulars not recited in this Resolution, the elections shall be held as nearly as practicable in conformity with the Elections Code of the State of California. The votes cast for and against the measure shall be separately counted, and if the measure receives a majority of the votes cast by the qualified electors voting on the measure, the general sales tax in the amount stated in the Ordinance shall be effective and ratified. Should another proposed measure with conflicting provisions appear on the same ballot, and each proposed measure receives a majority of votes, the proposed measure with the highest number of affirmative votes shall prevail, in conformity with section 9123 of the Elections Code. Section 5. Sample Ballot. The Registrar-Recorder/County Clerk is instructed to print the entire proposed Ordinance in the sample ballot. Section 6. Consolidation. The election called by this Resolution shall be consolidated with the other elections conducted by the Registrar-Recorder/County Clerk to be held in the County of Los Angeles on June 2, 2026, and the measure shall be placed on the same ballot in the order set forth in this Resolution. The precincts, polling places, vote centers, precinct board members, election workers, and facilities shall be the same as provided for the June 2, 2026, statewide primary election. Section 7. Authority. This Resolution is adopted pursuant to sections 10403 and 12001 of the Elections Code and section 25201 of the Government Code. The Executive Officer -Clerk of the Board of Supervisors is ordered to file a copy of this Resolution with the Registrar-Recorder/County Clerk at least eighty-eight (88) days prior to the day of the election. The Registrar-Recorder/County Clerk is authorized, HOA.105763538.16 Packet Pg. 22 2.a instructed, and directed to prepare any documents and take any additional actions that may be necessary in order to properly and lawfully conduct the election. Section 8. California Environment Quality Act. Based upon all of the facts before it on this matter, the Board of Supervisors finds that the submission of the measure to the voters is not subject to, or is exempt from, the California Environmental Quality Act (CEQA). Submission of the measure is not a project as defined by California Code of Regulations, title 14, section 15378(b)(4) because it relates to the creation of government funding mechanisms, which do not involve commitment to any specific project which may result in a potentially significant physical impact on the environment. BE IT FURTHER RESOLVED: The foregoing resolution was on the day of 2026, adopted by the Board of Supervisors of the County of Los Angeles and ex officio the governing body of w all other special assessment and taxing districts, agencies, and authorities for which L said Board so acts. N a� EDWARD YEN Executive Officer Board of Supervisors ~ r Deputy APPROVED AS TO FORM: DAWYN R. HARRISON County Counsel By: EVA CHU Senior Deputy County Counsel HOA.105763538.16 Packet Pg. 23