America’s most expensive rental market just got even worse as county plots punishing tax hike

America’s most expensive rental market could soon become even more pricey after officials voted to ask residents to approve a countywide sales tax increase amid a looming fiscal crisis.

Santa Cruz County Board of Supervisors agreed Tuesday to place a temporary half-cent sales tax measure before voters on the Nov. 3 ballot while declaring a state of financial distress, the Santa Cruz Sentinel reported.

If approved by voters, the measure would generate an estimated $27 million a year over five years to help fund healthcare, emergency services, homelessness programs and mental health treatment.

The proposal comes just days after Santa Cruz was identified as the most expensive rental market in the US, with a full-time worker needing to earn about $81.04 an hour to afford a modest two-bedroom apartment.

Typical fair-market rent in the region exceeds $4,200 a month, making it even less affordable than San Francisco, according to the National Low Income Housing Coalition.

Under the proposal, the sales tax would rise from 9.75% to 10.25% in Santa Cruz, Scotts Valley and Watsonville.

Residents in unincorporated parts of the county would see the rate increase from 9.5% to 10%, while Capitola’s rate would climb from 9.25% to 9.75%.

Groceries, prescription medications, diapers, feminine hygiene products and several other necessities would remain exempt.

County officials say the tax is necessary because sweeping federal policy changes are expected to slash funding for healthcare and social services while shifting additional financial burdens onto local governments.

Officials estimate those changes could saddle the county and its partner organizations with more than $150 million in lost revenue and higher costs over the next five years.

“This is coming before the board because of one reason, and that’s because we have a federal administration that is targeting our vulnerable populations and is attempting to dismantle the Affordable Care Act,” Board Chair Monica Martinez said during the board meeting.

“We have many residents who ask, ‘What can we do; what can we do to stand up against this federal administration?’ This ballot measure is an opportunity for them to do something.”

County Executive Officer Nicole Coburn warned the financial strain would extend far beyond county government.

“These impacts are going to compound over time and are going to impact our entire healthcare system and the safety net,” Coburn said. “These changes will not just stop at the county budget. And I want to reinforce [that] this is going to ripple across the entire local safety net.”

Officials say local hospitals could face mounting pressure as more uninsured patients seek emergency treatment, while providers across the region could collectively lose roughly $200 million annually if healthcare coverage continues to shrink.

Not everyone supported the proposal.

Resident Becky Steinbruner argued the sales tax would disproportionately burden lower-income residents and retirees.

“This is a regressive tax that will hurt those people, the very people that you’re saying need the help,” Steinbruner said. “My family has to live within our means and I think the county needs to do the same.”

County officials acknowledged the proposed tax would not replace all of the anticipated funding losses, describing it instead as a stopgap measure intended to prevent essential services from unraveling.

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