Two years ago, 125 local tax measures appeared on ballots. Ninety, says the Howard Jarvis Taxpayers Association, passed. A number of cities now have local sales taxes that exceed 10%.
Several cities in “conservative” Orange County are likewise asking voters to approve various local tax increases. We won’t know until the deadline in August how many local governments will be begging voters to raise taxes in November, but the numbers will be mind-blowing. It’s a one-way ratchet every election cycle.
“Historically, whenever there’s a gubernatorial election or a presidential election year, you’re going to see a lot of local governments asking the voters to approve tax increases,” says David Kline of the California Taxpayers Association.
Pasadena is one of several cities where voters will likely have to decide this fall if they want higher taxes. Local governments that already have measures on the ballot include Los Angeles (raising the sales tax from 9.75% to 10.25%), San Diego County (half-cent sales tax hike) and the city of Orange (a full cent added to the sales tax). Five Bay Area counties and the city of San Francisco will have a transit tax on their November ballots.
These measures are usually placed on the ballot by elected officials, which is the case in Rocklin, where the sales tax will grow to 7.75% if the proposal passes. In other instances, advocacy groups ask for tax hikes to be put before the voters through signature-gathering. Politicians love to say that the people are voting for these taxes themselves, but that’s often a dodge they use to avoid having to make hard decisions.
Either way, residents should be careful what they vote for. More spending does not always equate with improved or expanded services.
Local governments are not immune from overspending, and even as the country’s “largest cities are increasing their spending at almost unprecedented rates,” says RealClearInvestigations, they have little to show for it.
In previous eras, the cities had federal dollars to burn. Today, however, they’re bound to run into trouble now that the pandemic relief spending has finally ended. The money just isn’t there, even though cities hit a record last year in revenues from sales and property taxes, which were expected to fall slightly.
Despite the spending, which exceeds the rate of inflation, residents aren’t seeing their cities improve. Using federal data, the RCI analysis reports “that key quality of life metrics in major cities have mostly been stagnant during the spending spree.” The return on “investment” has been rather poor.
“The cities that boosted their spending the most were, on average,” says the RCI report, “no more or less likely to see measurable progress in” tackling homelessness, cutting violent crime rates, smoothing income inequality nor making rental property more affordable.
Far too much of cities’ unsustainable spending habits are eaten up by snowballing bureaucracies, cushy retirement plans for city workers, out-of-control healthcare costs and bloated union contracts.
One of the worst offenders is Los Angeles, where spending on homelessness has soared, yet the homeless are still with us in alarming numbers. The city, whose 2022 “mansion tax” to fund homeless programs has backfired, spent $428 million on its homeless troubles last year but it would be hard to find anyone who is satisfied with results. Maybe it’s because only 10% of those dollars went directly toward helping the homeless permanently leave the streets.
When confronted by taxpayers who aren’t inclined to pay more, localities tend to hide behind the “firefighters first” threat. They tell voters that if they don’t get the tax hikes that they’re demanding, they’re going to have to layoff police officers, firefighters and probably teachers. It’s a scare tactic that implies public safety and schooling will be compromised if voters don’t surrender.
One more sensible — and more ethical — approach is the cut the massive amount of fat in the budget, targeting undisciplined and politically connected spending that can be easily eliminated without compromising public safety and education. “The problem is that when governments start to spend money, they find it hard to stop spending money,” says economist Thornberg. “And after a year and a half of partying, you can’t get back in those old pants. You have these bloated budgets in many cities.”
And officials need to stand up to union demands during salary negotiations. That’s especially hard when it comes to police and firefighters given their popularity, but the median local firefighter compensation package in California exceeds $250,000 and public-safety budgets consume the lion’s share of local revenue. City officials often agree to large salary and swelling benefits even when they haven’t identified how they’re going to pay for them. At the same time Santa Ana was looking at a $30 million drop in sales tax revenue, the city approved $27 million contract with the Police Officers Association that included big salary boosts.
The 2025 University of Denver-Truth in Accounting report, the Financial State of the Cities, found that 54 of the 75 big cities nationwide that were reviewed could not pay their bills in fiscal 2023. San Francisco was ranked 64th in the report and is considered a Sinkhole City and needs “$12,800 from each of its taxpayers to pay all of its outstanding bills.”
But the problem isn’t just in big cities. It’s everywhere. If city officials can’t say “no” to more spending, then voters will have a chance to do it for them.
Kerry Jackson is the William Clement Fellow in California Reform at the Pacific Research Institute.