Santa Ana Voters to Decide on Making 1.5% Sales Tax Permanent After Council Vote

The Santa Ana City Council voted 5-2 on Tuesday to place a measure on the November ballot that would make the city's 1.5% local sales tax permanent. The tax, known as Measure X, was originally approved by voters as a temporary measure in 2018 and was scheduled to begin phasing out in 2029.

The revenue from Measure X currently accounts for over $80 million annually, or about 20% of Santa Ana’s general fund. City officials have stated these funds are critical for maintaining services such as police and fire response, street and pothole repairs, graffiti removal, park maintenance, and homelessness mitigation efforts. Without the tax, the city projects it would face a $30 million budget deficit by fiscal year 2028-29.

For businesses operating in Santa Ana, the prospect of a permanent sales tax hike presents a significant challenge that goes beyond the checkout counter. While the city services funded by the tax—like public safety and infrastructure maintenance—create a more stable environment for commerce, a permanently higher tax rate directly impacts financial planning and competitiveness. In our experience, businesses must treat this not as a temporary line item but as a fixed component of their cost structure. This requires a strategic review of pricing, supply chain costs, and long-term budgeting. Companies will need to decide whether to absorb the cost, which impacts margins, or pass it on to consumers, which can affect sales volume in a price-sensitive market. Navigating these local tax complexities is a core part of maintaining financial health, and our work in tax preparation and compliance focuses on helping businesses adapt to exactly these kinds of permanent fiscal changes. To ensure your business is prepared for this potential shift, contact C&S Finance Group LLC at csfinancegroup.com for strategic guidance.

The original Measure X, approved by about 58% of voters in 2018, was structured with a 20-year lifespan. The rate was set to decrease to 1% in 2029 before being eliminated entirely in 2039. The new ballot measure, if passed by a majority of voters in November, would remove both the rate reduction and the expiration date, locking in the 1.5% rate indefinitely.

City officials argue that making the tax permanent is essential for fiscal stability. During Tuesday's council meeting, Assistant City Manager Kathryn Downs explained that the city would still face minor budget shortfalls even if the measure passes, but they would be far more manageable. “If Measure X were to be made permanent, we should expect to have a fairly small structural gap to address each year, less than 2%,” Downs said. She noted that placing the measure on the 2026 ballot gives the city three years to adjust its plans if voters reject it.

The council's decision was not unanimous. Councilmembers Jessie Lopez and David Penaloza, both of whom are running for state assembly, cast the two dissenting votes. Penaloza voiced concerns that city officials have mismanaged taxpayer funds, suggesting the city's budget issues stem from more than just a lack of revenue.

Despite the political division, a May survey of 500 Santa Ana residents, conducted by consultants hired by the city, indicated that more than 60% of those polled would support making the tax increase permanent. This suggests the measure has a strong chance of passing in November.

Santa Ana is not the only municipality in the region turning to voters to address budget deficits. Several other Orange County cities are also considering new or extended taxes. Voters in the city of Orange will decide on a temporary 1% sales tax increase, while San Clemente voters will consider a local sales tax to fund beach restoration. This trend reflects growing fiscal pressures on cities throughout Southern California. For comparison, Orange County's base sales tax is 7.75%, while Los Angeles County has a base rate of 9.75%, with some cities like Lancaster and Palmdale reaching as high as 11.25%, according to the California Department of Tax and Fee Administration.

With the council's vote, the fate of Measure X now rests with Santa Ana voters. The outcome of the November election will determine the city’s financial path for the foreseeable future, directly impacting the level of public services and the tax obligations for businesses and residents alike.