Two years ago, 125 local tax measures appeared on California ballots, and 90 of them passed, according to a new analysis by the Pacific Research Institute. The report, published by California reform fellow Kerry Jackson, finds that cities across the state are turning to voters to approve tax increases rather than cut spending, with several cities now charging local sales taxes exceeding 10%. The pattern repeats every election cycle, creating what the report calls "a one-way ratchet."
Local governments with tax measures already on the ballot include Los Angeles, which wants to raise the sales tax from 9.75% to 10.25%, San Diego County seeking a half-cent sales tax hike, and the city of Orange proposing a full cent addition to its sales tax. Five Bay Area counties and San Francisco will vote on transit taxes in November. Rocklin's sales tax would grow to 7.75% if its measure passes. Several cities in Orange County are also asking voters to approve various local tax increases, and the final count of November ballot measures won't be known until the August deadline, but the report expects the numbers to be "mind-blowing."
The report finds that more spending doesn't equate with improved services, citing RealClearInvestigations data showing the country's largest cities are "increasing their spending at almost unprecedented rates" with little to show for it. Despite cities hitting a record last year in revenues from sales and property taxes, key quality of life metrics "have mostly been stagnant during the spending spree," according to the analysis. Los Angeles spent $428 million on homelessness last year, but only 10% of those dollars went directly toward helping the homeless permanently leave the streets. The 2025 University of Denver-Truth in Accounting report found that 54 of 75 big cities nationwide couldn't pay their bills in fiscal 2023, with San Francisco ranked 64th and needing "$12,800 from each of its taxpayers to pay all of its outstanding bills."
The report traces the problem to unsustainable spending habits driven by snowballing bureaucracies, retirement plans for city workers, out-of-control healthcare costs, and bloated union contracts. City officials often approve large salary increases without identifying funding sources—Santa Ana approved a $27 million contract with its Police Officers Association that included big salary boosts at the same time it faced a $30 million drop in sales tax revenue. The median local firefighter compensation package in California exceeds $250,000, and public-safety budgets consume the lion's share of local revenue. Cities are now running into trouble after pandemic relief spending ended, even though their spending exceeds the rate of inflation. According to economist Thornberg quoted in the report, "after a year and a half of partying, you can't get back in those old pants."
The report concludes that if city officials can't say no to more spending, then voters will have to do it for them. Rather than resort to tax increases or the "firefighters first" scare tactic—threatening to lay off police, firefighters, and teachers if tax hikes fail—cities should cut what the report calls "the massive amount of fat in the budget" and target undisciplined, politically connected spending that can be eliminated without compromising public safety and education. The bottom line: California's local governments have a spending problem masquerading as a revenue problem, and voters hold the power to stop the cycle.