Santa Clara County officials are quietly preparing to put on the November ballot a sales tax increase to bail out the county hospital system, which has been running a deficit for years and is now facing cuts in Medi-Cal.
The deadline for the ballot is Friday, Aug. 8, yet the Board of Supervisors has not held any hearings about the proposed five-eighths sales tax.
However, the nonprofit Valley Health Foundation in San Jose has started raising money for a campaign to get voters to pass the tax in November, according to the San Jose news website Spotlight. Spotlight says the foundation has received $1 million in pledges for the campaign.
Spotlight said the county is looking to pass a “general tax” rather than one earmarked for the hospital and health care system. A general tax only requires a simple majority to pass, while a tax for a particular purpose needs a two-thirds vote to win.
The downside to a general tax, however, is that officials can use the money for other purposes than the ones they state during the campaign.
The campaign will focus on President Trump’s “big beautiful budget,” which tightens up eligibility requirements and requires able-bodied adults without children to work at least 20 hours a week if they want benefits.
The authors of the budget bill believe that 11.8 million Medicaid enrollees will drop out of the program if they have to meet eligibility requirements.
Medicaid, the federal program for the poor, is called Medi-Cal in California.
Cato Institute policy analyst Dominik Lett points out that Medicaid has been growing faster than inflation, and the One Big Beautiful Bill aims to trim the growth of federal Medicaid outlays from about 4.5% per year to roughly 3%.
“Let’s be clear: That is not a spending cut. And it’s not austerity either,” Lett wrote in an opinion piece.
“As for those draconian “cuts” cited in headlines — like the CBO’s estimate that 10.3 million people could lose coverage? They assume states will drop beneficiaries en masse rather than adjust budgets, improve eligibility oversight or game the system via creative financing gimmicks.”
Santa Clara County, which gets about $2 billion a year in Medi-Cal funds, runs Valley Medical Center on Bascom Avenue and three smaller hospitals. The county hospitals are often the only option for the poor. One in four of the county’s nearly 2 million residents are Medi-Cal enrollees. Half of the county hospital system’s patients pay through Medi-Cal.
Silicon Valley Taxpayers Association President Mark Hinkle said he will argue against the measure.
“Sales taxes are regressive taxes — the poor get hit hardest,” Hinkle told San Jose Spotlight. “Every time they make a purchase they’re going to be taxed. Those who care about the poor and downtrodden should be on our side.”
The county’s hospital costs, driven mostly by payroll and supplies, routinely outpace revenue by hundreds of millions of dollars. That requires the county to make up the difference every year out of its general fund — last year the subsidy came to $600 million.
For this purpose, a general tax should be a no-go. Earmark the tax revenue or watch the County divert the funds.
There’s an old song called “First I Look at the Purse.” When evaluating general tax measures and the promises made about how money will be spent, first I look at the PERS reports.
Santa Clara County has a Miscellaneous plan and a Safety plan with CalPERS. The combined payment for the current fiscal year is about $540 million. That’s projected to rise to over $650 million in three years and about $685 million in five years.
How much money would a 5/8-cent sales tax raise? The VTA has three 1/2-cent taxes that each brought in about $270 million in F23, so I’m guessing around $350 million/year. Surprisingly, it looks like less than half of the tax increase would be gobbled up by CalPERS in the next few years.
Philanthropy can either be with banners confetti or ribbon-cutting ceremonies. It can also be done “anonymously”, no strings attached. Usually there is a self-interest involved where a tax deduction is forthcoming; some folks do it for other reasons like altruism, or just want to dissociate from the trappings of a wealthy lifestyle, fulfilling a promise of giving back to the community that was supportive in their years until of struggle. If the Board (or bored) of Directors have really… I mean REALLY exhausted any and ALL MEANS to seek (beg) financial assistance from wealthy residents. or reaching out to past benefactors and patients living in other states by running ads in noteworthy news and social media circles, then there would be no need to have a vote on taxes that would impact ordinary hard-working residents who are already overburdened with the exponentially-increasing cost of living in Silicon Valley. finally, one other thing that must also be considered is the current operations of the hospital: is it run like a “mean, lean, fighting machine” with an army of motivated medical professionals with the desire to change their patients’ lives? Or is it a sieve, full of incompetent practitioners, where money is going toward big salaries and too many unaccounted “miscellaneous expenses” like malpractice lawsuits? these must also be taken into consideration. Philanthropists would surely not like the idea of finding out they’ve given financial support for a bad proposition that’s on a course of natural demise.
It isn’t clear that a sales tax is regressive. It’s true that people with high incomes can afford to live on a fraction of their income and invest the rest. But people with low incomes might spend 50% on housing and 30% on food, which aren’t subject to sales tax.
I’m skeptical of new taxes, but for the taxpayer association president to claim, “Every time they make a purchase they’re going to be taxed,” is mere political rhetoric. May he should say, people with middling incomes will shoulder most of the burden, which is how society functions in general.
Woody, you sound like one of those politicians who is trying to avoid the blame for slamming poor people with regressive taxes. Since you think it’s unclear whether a sales tax is regressive, let me help you with some basic math.
Consider a family with a $30,000 income and another with a $50,000 income, both facing a 5% sales tax. If they both spend $10,000 on taxable goods, they both pay $500 in sales tax. However, for the first family, this represents 1.7% of their income, while for the second family, it’s 1.0%.
Similarly, if a low-income person and a high-income person buy the same $1,000 computer with a 6% sales tax, they both pay $60. But for a person earning $10,000, that $60 is a greater portion of their income than for someone earning $50,000.
So I know you want to defend the politicians who have been hitting the poor with these regressive taxes, but just do the math.
I’ve done the math, and you didn’t pay attention to my example. I don’t know how “a family” making $30k/year survives around here, but if they spend 50% on housing as I suggested, that’s $1250/month and if they spend 30% on food that’s $25/day. Your idea that they might buy $10k of taxable goods is pure fantasy and the sales tax hasn’t been 5% or 6% in forty or fifty years.
If they’re paying FICA, that costs another $2k/year. Now there’s a regressive tax.
Oh Woody, this is going to be way over your head. It’s half true to say that FICA is regressive. The part you left out, however, is that the Social Security benefit formula is progressive, meaning lower-income workers receive a higher percentage of their contributions back in benefits.
Isn’t the new Democrat talking point that they want to lower costs? I guess that’s fake and they’re cool with raising everybody’s prices.
August 7, 2025, 2:00 p.m. Special Meeting
At some level, it’s deplorable for them to do this at a special meeting right before the deadline with no information packet for anyone to study so they might understand or suggest changes.
On the other hand, when I searched for the Spotlight story, there was one this week and another one six years ago(!) about a proposed 5/8-cent sales tax being spearheaded by Cindy Chavez. Maybe they’ll call this Measure CC in her honor.
The opponents must be working on an argument and rebuttal already. A real coup would be if they got Larry Stone to sign.