Los Angeles County Businesses Face Potential Sales Tax Hike with Measure ER on June 2 Ballot

LOS ANGELES – Businesses and residents in Los Angeles County will decide on a proposed sales tax increase this spring, as a measure to fund public health services was officially placed on the June 2, 2026, primary election ballot. The Los Angeles County Board of Supervisors voted on February 10, 2026, to advance the proposal, known as Measure ER, directly to voters.

Officially titled “The Essential Services Restoration Act for Los Angeles County General Sales Tax Measure,” the initiative seeks to generate new revenue streams for the county’s healthcare system. The measure was introduced by Supervisors Holly J. Mitchell and Hilda L. Solis in direct response to what county officials describe as anticipated cuts in federal funding. According to a fact sheet from the Los Angeles County Chief Executive Office, the proposal is a reaction to potential fiscal pressures stemming from federal legislation, including the act cited as H.R. 1, the “One Big Beautiful Bill Act.”

The passage of Measure ER would result in a county-wide increase in the general sales tax. While the specific rate of the proposed increase has been a subject of ongoing discussion, any hike would directly affect consumer prices and the compliance obligations for small and mid-sized businesses operating within the nation’s most populous county. Businesses would be responsible for collecting the higher tax and remitting it to the state, requiring updates to point-of-sale systems and accounting practices.

Proponents argue the measure is critical for preserving access to essential health services for millions of residents, particularly in underserved communities. They contend that without a new local funding source, county hospitals and public health programs face significant and potentially damaging shortfalls. The measure includes provisions for a committee to review and oversee how the new tax revenue is spent.

For the local business community, the proposal introduces a new layer of financial uncertainty. A higher sales tax can impact consumer behavior, potentially dampening discretionary spending as the total cost of goods increases. Retailers and service providers located near the borders of Orange, Ventura, San Bernardino, and Kern counties may also face a competitive disadvantage if their tax rates become significantly higher than those in neighboring jurisdictions.

Measure ER is part of a crowded primary ballot that will shape county leadership and policy for years to come. According to election information compiled by Ballotpedia, voters will also decide on numerous other key county positions. These include races for County Sheriff, County Assessor, several seats on the Board of Supervisors, and a significant number of judicial offices for the Los Angeles County Superior Court. The filing deadline for candidates in these races was March 6, 2026.

The judicial elections, in particular, represent a critical but often overlooked aspect of the local business environment. As highlighted by organizations like La Defensa and the Los Angeles County Bar Association, Superior Court judges hold considerable power that can indirectly affect businesses through rulings on contracts, liability, and regulatory enforcement. These groups publish voter guides and candidate evaluations to help voters navigate the dozens of judicial seats up for election.

While the stated goal of funding healthcare is important, any sales tax increase places a direct operational and financial burden on small and mid-sized businesses. The reality is that these enterprises, which form the backbone of the L.A. County economy, are the ones tasked with implementing the change, navigating the compliance, and explaining higher prices to their customers. In our experience, such changes are never as simple as flipping a switch. They require careful planning, system updates, and financial forecasting to absorb the impact on cash flow and competitiveness. This is especially true for businesses in price-sensitive sectors or those located near county lines where customers can easily shop elsewhere to avoid the tax.

Navigating these shifting local tax landscapes is a core part of our tax preparation and compliance services. A change like the one proposed in Measure ER can have cascading effects on a company’s financial strategy, from pricing models to revenue projections. We advise clients to proactively model the potential impact of such tax changes rather than waiting for them to take effect. Business owners facing uncertainty about how to prepare for potential changes should contact C&S Finance Group LLC at csfinancegroup.com to ensure they remain compliant and financially sound.

The results of the June 2 primary will be closely watched. Should Measure ER pass, businesses across Los Angeles County will have a limited window to prepare for its implementation. If it fails, county officials will be forced to seek alternative solutions to the projected healthcare funding gap. For the candidate races, any contest where no individual receives a majority of the vote will proceed to a runoff in the November 3, 2026, general election.