Long Beach shoppers will pay more sales tax in 2025. Here’s why

A voter-approved sales tax to pay for homeless services and housing in Los Angeles County will go into effect April 1, 2025. How will that affect Long Beach shoppers and businesses?

A county sales tax for homeless services was already in place, and Long Beach residents have been paying a sales tax that funds city operations since 2016. So the new county tax known as Measure A – which voters approved on Nov. 5 – adds to an already confusing mess of regulations. Let’s untangle it.

Q: How much sales tax is currently charged in Long Beach and where does it go?

A: Long Beach is one of nearly 60 cities across California where shoppers are charged 10.25% sales tax on purchases including furniture, clothes and toys. That means an item selling for $100 would cost the purchaser $110.25 including tax. (Essentials such as prescription drugs and most food in grocery and convenience stores are exempt, but tax is charged on over-the-counter drugs, restaurant meals and some other hot or prepared foods.)

Most of that total is a statewide 7.25% sales tax, which the state collects from businesses and divvies up to pay for state services such as education and criminal justice; 1.25% gets funneled back to cities and counties to fund transportation (freeways, roads and public transit), public safety and other local needs.

Local jurisdictions like Long Beach and Los Angeles County can add their own sales tax for local use, though voters must approve any additions or increases. In 2016, Long Beach voters agreed to an add-on for local services (confusingly also called Measure A) through the end of 2026; it was set at a full 1% (one penny on every dollar spent) for the first six years and was intended to drop to 0.5% for the last four years.

Then, in 2017 Los Angeles County voters adopted Measure H, a 10-year, 0.25% sales tax to address homelessness, and things got complicated. The new tax couldn’t be charged on purchases in Long Beach because the total sales tax would have exceeded a state-imposed cap – and since the city’s 1% was approved first, it took precedence. (The county still provided the city tens of millions in Measure H funding, but not as much as it might have if the 0.25% had been charged here.)

Fast-forward to 2020, when Long Beach asked voters to approve changes to its Measure A that would make the 1% tax permanent, but also take Measure H into account by reducing the city’s add-on to 0.75% until Measure H’s expiration in late 2027. This allowed the county to collect its 0.25% in Long Beach without going over the state cap.

Q: Why did the county just add a new tax, and how does it affect the existing ones?

A: Technically, Los Angeles County’s new homeless services tax (we’ll call it county Measure A) replaces the old Measure H, but it’s higher – 0.5% (a half cent) instead of 0.25% because it’s also intended to help fund building or buying homes to get unhoused people off the street and out of shelters. (Measure H only funded programs and services, not buying land or buildings.)

In the meantime, state legislators passed a special law allowing Los Angeles County to exceed the sales tax cap, joining a handful of cities including Alameda and others in the Bay area that charge 10.75%.

If Long Beach were to keep to the status quo (0.75% through late 2027), Long Beach shoppers would pay a total sales tax of 10.5%. But because the state raised the local cap, city officials say they can go back to collecting their Measure A’s full 1% on April 1, when the county’s old homeless tax (Measure H) goes away and is replaced by its new one (county Measure A). That would push the total to 10.75%, the maximum that can be charged in Los Angeles County.

Q: Why did the Long Beach City Council have an emergency meeting Thursday to talk about the sales tax, and what concerns have people expressed?

A: The council met this week to approve a rule telling the state how much tax to collect in the city. It happened in a hurry because officials said they only learned the week before that they had to meet a Dec. 12 deadline so the state can prepare to start collecting the adjusted tax amount on April 1.

Several issues were raised at the council meeting. Councilmember Kristina Duggan said she’s heard from multiple people worried the tax could hurt local businesses and send people into Orange County to shop and dine. According to this state tax table, nearby OC cities’ tax rates include 7.75% in Cypress, Anaheim and Huntington Beach and 8.75% in Seal Beach.

Long Beach resident and frequent council critic Ian Patton called the council’s move “wrong and illegal,” arguing that tax rates can only be changed by a public vote, and the language of the city’s 2020 Measure A clearly set a date when the city tax would move back to the full 1% – and that date is Oct. 1, 2027. He contends that what Councilmember Joni Ricks-Oddie called “technical modifications” to city rules actually constitute an unlawful tax increase by the council.

City lawyers disagree, saying that while the city’s 2020 ballot measure didn’t anticipate the county ending its 2017 homeless services tax early, it did specify that the city sales tax would go back up after the old county tax went away.

“It was the voters’ will that the rate change once Measure H sunsetted,” Deputy City Attorney Ashleigh Stone said in a phone interview.

Patton said in an email after the council vote that his group, Long Beach Reform Coalition, plans to file a legal challenge to block the city sales tax increase. If the city were to forgo that 0.25% until late 2027, city officials said, it would miss out on about $60 million in revenue over that two and a half years.