Long Beach City Faces Lawsuit Over Early Sales Tax Increase: Legal or Overreach?

The Long Beach City Council fast-tracked a sales tax increase in December, aiming to generate an additional $24 million annually. However, a legal challenge now questions whether the move was lawful.

A local anti-tax group, the Long Beach Reform Coalition, filed a lawsuit on Feb. 6, arguing that the council’s decision was “unconstitutional” because it bypassed voter approval. The lawsuit focuses on Measure A, a local sales tax originally passed in 2016 and extended in 2020. Under Measure A, the city’s sales tax rate was set to increase from 0.75% to 1% in October 2027. But on Dec. 12, the City Council voted 6-0 to implement the increase more than two years early, in April 2025. This would push Long Beach’s total sales tax rate to 10.75%—the highest in California.

The lawsuit argues that this violates Proposition 218, which requires voter approval for any new, extended, or increased taxes. “If you change anything that was approved by voters in a ballot measure, it can only be changed by another ballot measure,” said Ian Patton of the Long Beach Reform Coalition. The group is asking the court to block the tax increase, declare it illegal, and stop the city from collecting the additional tax.

City officials have not commented directly on the lawsuit but previously defended their decision. At the Dec. 12 meeting, Councilmember Kristina Duggan raised concerns about the tax change’s legality. In response, the city’s attorney and financial officer argued that the move was legally sound and aligned with voter intent.

Typically, California caps local sales taxes at 10.25%. Measure A’s 1% tax would have exceeded this limit if implemented immediately, so the city initially planned for it to remain at 0.75% until 2027, when a separate countywide 0.25% tax (Measure H) was set to expire. However, in November 2024, voters approved a new 0.5% county tax to replace Measure H. This new tax, designed to fund homelessness and housing programs, was granted an exemption from the state’s tax cap. With Measure H ending early, Long Beach officials saw an opportunity to raise Measure A’s rate ahead of schedule without exceeding the state’s maximum tax threshold.

City Attorney Dawn McIntosh argued that the 2027 increase date was chosen only because the city hadn’t expected Measure H to end sooner. She also noted that the ballot summary, which was limited to 75 words, wasn’t the sole legal consideration in interpreting voter intent. City Manager Tom Modica echoed this view, stating, “The crux of Measure A was that voters wanted a 1% tax in Long Beach.”

Mayor Rex Richardson supported the early tax increase, emphasizing the financial impact: “If we do not do this today, we essentially forfeit up to $60 million in revenue for community services.” The city is also facing a $30 million budget shortfall in the next fiscal year, with an $87 million structural deficit projected through 2030 due to declining oil revenues. Officials warned that failing to implement the tax hike could force cuts to essential services, citing past budget crises that led to 200 police layoffs and fire station closures.

The lawsuit has fueled frustration among residents like Don Allison, who criticized city leadership for broken promises and rising costs. “First, the failed promises and lies by Robert Garcia, and now a mayor and City Council that do nothing but back this up,” Allison said. “They raise taxes behind our backs, hike utility costs, and neglect long-promised road repairs. Meanwhile, they focus on parades, photo ops, and downtown showpieces for the Olympics while our roads crumble, homelessness worsens, and the city looks third-world. It’s disgraceful.”

Opponents, however, argue that the tax increase will hurt local businesses by driving shoppers to neighboring areas with lower tax rates, such as Signal Hill (10.25%) and parts of Orange County (7.75%–9.25%). “City Hall is not treating residents fairly,” Patton said. “Unfortunately, it takes a lawsuit to force them to follow the law on something as basic as the sales tax, which affects every single person in the city.”