Measure E is a proposed temporary half-cent sales tax hike to address the effects of federal changes to welfare programs, which are expected to remove many people from health care plans and food assistance. The money is intended to go towards the county’s increasing costs and community partners, like hospitals.
A “yes” vote is for the sales tax hike.
A “no” vote is against the sales tax hike.
The measure needs more than 50% of the vote to win.
To keep local hospitals/emergency rooms open, protect ambulance response, sustain access to urgent healthcare, including reproductive and mental health care, support local food/housing assistance and other essential services, and partially restore critical lost federal funding, shall the County of Santa Cruz be authorized to collect a supplemental half-cent (0.5%) general sales tax for 5 years, providing $27,000,000 annually in locally controlled funds?
Measure E would increase sales tax rates across Santa Cruz County by 0.5%, adding an additional 50 cents to an $100 purchase. Groceries, prescription medicine and some other products are exempt from sales taxes.
The higher sales tax would take effect April 2027 and would continue for five years unless overturned by another ballot measure.
The impetus for Measure E was the adoption of the 2025 federal budget bill H.R. 1, the “One Big Beautiful Bill.” The bill decimated funding for health care, food assistance and other social safety net services. It also tightened restrictions on who can receive welfare benefits, and requires the county to undertake more work ensuring that beneficiaries meet the requirements. Though the law was enacted last year, many of the changes to welfare programs have yet to take effect.
County staff have estimated that the county and other local organizations that serve welfare recipients, including local hospitals, will lose $200 million annually. Measure E wouldn’t fill that gap completely — it’s estimated to raise an estimated $6.7 million between April and July 2027, and approximately $27 million annually thereafter.
“This is really triaging the most serious impacts and protecting our critical local capacity,” Santa Cruz County Executive Officer Nicole Coburn said at an Aug. 5 meeting of the Santa Cruz County Board of Supervisors. “It’s going to buy us time over the next five years as we are also working on other solutions.”
Since the passage of H.R. 1, voters in Santa Clara County and Los Angeles County have approved temporary sales tax hikes to address the law’s effects. Both were structured as general taxes not earmarked for a specific purpose, like Measure E.
Measure E is a general tax that can legally be used for any county purpose. The money aims to continue existing programs and services, not to establish new ones. A special tax, where money can only be used for a specific purpose, would have required a greater voter-approval threshold of 66.7%, or two-thirds majority.
In a non-binding resolution, the Santa Cruz County Board of Supervisors in August approved prioritizing Measure E money for:
- Emergency medical services and health care.
- Mental health and substance abuse treatment.
- Food access.
- Housing stability and homelessness response.
- Other county safety-net services.
County leaders have identified priorities for the money, including keeping local hospitals open and supporting local food and housing assistance.
Sales taxes in Santa Cruz County differ between the county’s four cities and unincorporated areas outside of cities.
Santa Cruz, Watsonville and Scotts Valley currently charge the state’s maximum sales tax of 9.75%. A state bill has cleared the three cities to exceed that cap if Measure E passes.
The highest sales tax rate statewide is 11.25%, charged by Lancaster and Palmdale in Los Angeles County.
Sales tax rates include money set aside for the state, local governments and transportation. Each local rate includes:
- 6% for the state.
- .25% for county transportation
- 1% for the county government
Over the years, county voters have approved additional countywide sales tax hikes, including:
- 0.5% for the Santa Cruz Metro.
- 0.5% for the Santa Cruz County Regional Transportation Commission.
- 0.25% for local libraries.
Some cities have voted in additional tax hikes, and 2024’s Measure K increased taxes in unincorporated areas outside of cities. Measure E would be the first countywide sales tax hike to benefit the county government.
Proponents of Measure E have highlighted H.R. 1’s drastic expected effects on local safety net systems.
As people lose access to federal food assistance, they are expected to increasingly strain local nonprofits like Second Harvest Food Bank. And as people lose health insurance, their healthcare needs will likely fall to the county and local hospitals — potentially crowding ER rooms and straining budgets.
State law requires the county to pay for emergency health care for uninsured people who can’t afford it. That includes services at county clinics and reimbursements to private hospitals, like Dominican and Watsonville Community Hospital, that treat the patients. Those reimbursements sometimes don’t cover the full cost of medical treatment, leaving both the county and hospitals on the hook. Already, Watsonville Community Hospital is in severe financial distress with its future uncertain.
District 5 County Supervisor Monica Martinez said it’s not only South County and those with Medi-Cal who will feel the effects of H.R. 1. “Measure E impacts everybody,” Martinez said.
For example, the federal cuts could make ambulances less available — which would greatly impact rural and older residents of the San Lorenzo Valley, she said.
Like all sales taxes, Measure E would raise money from visitors and tourists, not just residents.
Opponents of Measure E have argued that because there is no legal guarantee the money would actually be spent on mitigating the effects of H.R. 1, the money could instead go towards consultants, pension debt, or other costs unrelated to social services.
“While they adopted what they’re calling their guidance framework for what they would do with the money, it is absolutely not binding at all,” said Aptos resident and former supervisorial candidate Becky Steinbruner.
Steinbruner also said that:
- Given the financial urgency described by supervisors, they should have renegotiated its contract with county employee unions, rather than approve a 4% raise in the last budget. Supervisors have also changed county law to allow raises to their own pay — though they have not pursued such a raise.
- Sales taxes disproportionately weigh on low-income residents — the same population the tax aims to help.
Steinbruner and other opponents have also criticized the way county leaders have documented and spent money from prior sales tax measures.
Santa Cruz County voters have previously approved two other half-cent sales tax hikes: Measure G in 2018 and Measure K in 2024. They apply only to areas of the county outside of cities, unlike Measure E.
A 2022 Santa Cruz County Grand Jury report on Measure G concluded that the ballot question included misleading language about oversight and audits that never materialized, and that constituents deserved a more detailed breakdown of Measure G spending.
Following the report, supervisors wrote that Measure G spending received oversight through the ballot approval process.
In an Oct. 6 email, county spokesperson Jason Hoppin wrote that the county had followed through on the priorities identified by supervisors for Measure G, including improvements at parks and a program to provide mental health treatment and social services to people with frequent contact with law enforcement.
In 2023, Santa Cruz County resident Bruce Holloway sued to keep Measure K off the ballot because voters in cities were able to vote on a tax to be levied only in unincorporated areas. In a settlement agreement, the county agreed to document that Measure G and Measure K money benefited unincorporated areas only.
“Only because of Bruce Holloway’s lawsuit, there is any accountability at all,” Steinbruner said.
Hoppin disagreed, and wrote that the settlement “merely added an accounting step.”
Measure K has followed through on promised spending on roads, housing and homelessness. It has also spent significant money protecting the county against potential lawsuits.
Over the fiscal year that started in July, Measure K is expected to raise about $10.7 million. The county budget allocated $2 million of that money for roads, $1 million for environmental and parks projects, $1 million for housing, $1 million for homeless services, and $1.0 million for potential disaster costs. Nearly half of the money, about $5 million, went towards insurance on county property and liability insurance for potential lawsuits. Such insurance has grown increasingly expensive for public agencies across the state.
“In an era of budget austerity and with rising costs,” the county used Measure K to cover liability costs “to help preserve department programs and services,” Hoppin wrote. The move prevents county leaders “having to make cuts elsewhere to cover those costs,” he wrote.
An internal spreadsheet of Measure K and Measure G expenditures Hoppin provided noted that the spending on liability insurance was largely related to public safety — a group of departments that includes the Sheriff’s Office. Liability insurance costs are based on expectations of how often a specific department needs liability defense, Hoppin wrote, not an increase in lawsuits against the county.
The most recent county budget approved in June pulls millions of dollars from reserves to avoid cuts to services. H.R. 1 is part of the strain, but other issues predate the federal law.
- Since 2017, the U.S. Federal Emergency Management Agency (FEMA) has been slow to reimburse the county for road repairs following what became multiple natural disasters. In 2025, the county took out $105 million in debt to help temporarily bear the cost.
- In 2023, the overall cost of deferred maintenance on county roads, buildings and other infrastructure was estimated at more than $1 billion.
- Pension costs have also been a mounting drain on county coffers, as it backfills pension costs not fully funded by investments with the state CalPers system. Those costs are expected to peak or stabilize by 2030 and then decline as the most expensive pension plans expire.
Overall, the county faces a structural problem — the cost of providing government services outweighs the money it receives, County CEO Nicole Coburn wrote in this year’s budget message.
To address this issue, the county has repeatedly cut vacant positions, and is on a hiring freeze. Staff will soon issue recommendations for more cost-cutting measures, Coburn said at an Aug. 5 meeting of the Santa Cruz County Board of Supervisors.
Note: This page has been updated to correct the additional cost of the tax.