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 $5 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.
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.