Estimated $1B generated from new sales tax hike will sit frozen until lawsuit ends
An estimated $1 billion in new revenue generated from Los Angeles County’s latest sales tax increase will have to sit untouched as a lawsuit challenges the validity of the measure.Measure ER, which was approved by voters on June 2, took effect Thursday.However, the measure and any funds raised as a result of the sales tax hike will be dormant until the new lawsuit, filed by the Libertarian Party of L.A.
County is settled, the county announced.The lawsuit, which claims the measure and supporting state legislation are unconstitutional and should be nullified, was filed Aug.31.
The lawsuit also states that the enactment of the tax would exceed sales and transaction tax limits set by the state in several cities across the county.However, Governor Gavin Newsom signed Assembly Bill 1768 a day before the June election, enabling the county to exceed the state tax level.“The county cannot distribute the funds to hospitals, clinics or county health departments until the case is resolved,” L.A.
County Chief Executive Officer Joseph Nicchitta wrote in a letter to the Board of Supervisors on Tuesday.The new measure results in a half-cent (0.5%) sales tax increase in L.A.County for five years, with the goal of generating an estimated $1 billion annually to support healthcare and other essential services.Measure ER, also known as the Essential Services Restoration Act, increased the county’s baseline sales tax rate from 9.75% to 10.25%.
These rates vary across the county, with some cities reaching 11.25%, including Azusa, Calabasas, Compton, Gardena and Santa Monica.Lancaster and Palmdale take the cake with the county’s, and believed to also be the country’s, highest sales tax rate at 11.75%.Measure ER was proposed in order to address “significant funding losses tied to federal changes to Medi-Cal and other reductions that are impacting LA County’s healthcare and public health system,” according to L.A.County Public Health.Critics say voters approved Measur...