A proposed law could allow Los Angeles County to exceed the state limit on local sales tax, as county leaders eye an extension of a tax that has funded homelessness initiatives since 2017 but expires in 2027.
Assembly Bill 1679, which was introduced by Los Angeles-area Assemblyman Miguel Santiago, could allow Los Angeles County to exceed the 2% cap the county is allowed to collect in sales taxes by up to half a percent. It advanced out of committee this week and will head to a floor vote.
The bill’s passage wouldn’t automatically trigger a sales tax increase in LA County, but it would allow county officials to increase the rate.
It would require the county’s Board of Supervisors to put a measure on a future ballot for voters to decide, and the board has already signaled its approval; the panel voted Tuesday to support AB-1679.
If the county moves forward with a half-percent hike, a quarter percent of the funds would go toward continuing the county’s tax to fund homelessness initiatives (Measure H), with the second quarter going toward the recently formed LA County Affordable Housing Solutions Agency to help fund affordable housing production.
Exactly how the proposal would affect Long Beach is unclear.
While nearly half of the county’s 88 cities are already at the local cap of 10.25%, like Long Beach, the city has a unique situation when it comes to how it pays into Measure H.
For some cities, Measure H could phase out and be reimplemented without increasing their current sales tax rates, or they could increase their tax rates by just a quarter of a percent if the county seeks funding for LACAHSA.
But for Long Beach, if LA County pursues the full half-percent increase allowed under AB-1679, it’s possible the city’s sales tax rate would rise to 10.75%, which would put it at the highest rate of any city in the state, alongside multiple cities in Alameda County, which also have a 10.75% sales tax rate.
In an email, the city said it will continue to work with its consultants on how the bill would affect the city’s effective tax rate if it’s adopted and voters approve a new county tax measure. It could also seek a partial implementation of the tax increase if it’s approved.
For years, Long Beach has benefitted from Measure H without paying into the countywide tax because its own local sales tax increase, Measure A, was adopted a year before Measure H and put the city at the allowable local cap.
The city has gotten around $14 million annually from the tax to help pay for homelessness efforts in Long Beach, and earlier this year—the first year the city has paid into Measure H—Mayor Rex Richardson sent a letter to the county asking that the city receive its “fair share” of the funds, which city officials say is closer to $25 million.
Long Beach’s Measure A 1% sales tax has helped the city fund police and fire staffing, road repairs and other infrastructure fixes since it was approved in 2016. It has generated upward of $86 million annually for the city, but for the next four years, the 1% tax will be reduced to .75%, with the remainder going to the county.
The estimated Measure A revenue for this year is about $67 million.
Measure A, like Measure H, was supposed to be a temporary 10-year tax, but city officials asked voters to make it permanent in 2020, and the measure passed by 16 votes.
The permanent nature of Measure A could complicate how the potential tax increase in LA County affects Long Beach. When Measure H phases out in 2027, it’s expected that the city will return to collecting the full 1% of Measure A, with that funding staying inside the city.