A state judge has ruled Long Beach cannot raise its local sales tax two years sooner than the date included in a ballot measure that voters approved, saying it is unconstitutional to assume their intentions.
In two separate lawsuits heard in Sacramento Friday, Superior Court Judge Stephen Acquisto ruled in favor of the state’s tax department — which originally refused to tax at the new rate in April — as well as the Long Beach Reform Coalition, a local watchdog group, that in February sued the city on similar grounds.
The rulings potentially end a yearlong debate between legal experts, state accountants and civic watchdog groups that began after voters across Los Angeles County approved a different sales tax meant to fund homeless services.
For years, Long Beach shoppers paid a cumulative tax rate of 10.25%, formerly the state’s cap. Part of that money went to Los Angeles County under a temporary countywide sales tax called Measure H that charged 0.25% to fund homeless services.
In 2020, on the confidence that taxes were still needed to improve local infrastructure and bolster public safety, voters extended a local tax called Long Beach Measure A, with a stipulation that upon the ending of Measure H in October 2027, the city would raise the local sales tax up a quarter-cent, making it a 1% sales tax and ensuring Long Beach’s tax rate stayed at the highest possible level.
Then — unexpectedly — that timeline was upended.
Voters last November ended Measure H years early, replacing it with a higher, 0.5% county sales tax.
At the same time, state legislators took an unusual step of exempting this new measure from California’s tax cap, meaning it wouldn’t be included toward the cumulative 10.25% max.
City officials and attorneys quickly circled the matter, and in December, the Long Beach City Council — in lockstep with the city attorney, manager and mayor — said it was always the intention of the voters to raise Long Beach’s Measure A tax as soon as possible, regardless of the date.
In a 6-0 vote, the council agreed to remove the October 2027 date from tax’s city tax code, effectively raising the rate two years earlier than originally anticipated.
By February, LBRC sued the city, and in April — when the state began collecting new taxes — California’s tax department, known as the California Department of Tax and Fee Administration, refused to levy the new rate, saying it would violate the state constitution that says voters must approve the increase.
Instead of paying 10.75% in taxes on every purchase, shoppers and diners in Long Beach continued to pay 10.50%.
Long Beach sued the state tax department on March 21, arguing their understanding embodied the will of the voters, citing voter materials in the March 2020 sample ballot books they say back up this logic.
Leading up to trial, the city argued with either party that the rate change was tied to the sunset of the county measure — not any particular date — and said the county tax’s premature ending cast a legal cloud over the matter.
“The Court does not find this reading reasonable,” Acquisto said. “The City assigns too much weight to the ‘sunset’ language… The City’s reading would require the Court to disregard the dates specified in the measure as to render them meaningless.”
“Absent ambiguity, we presume that the voters intend the meaning apparent on the face of an initiative measure . . . and the court may not add to the statute or rewrite it to conform to an assumed intent that is not apparent in its language,” according to court documents.
Acquisto sided with the state’s interpretation that the matter was straightforward and simple: that the tax rate cannot be charged until the date approved by voters.
The ruling puts to rest any hope city officials had to reap millions of dollars through an extra two-and-a-half years at the higher rate. City officials estimate the difference to be upwards of $60 million.
Long Beach continues to have a combined sales tax rate of 10.50%, the same as 38 other cities in California.