Office of Finance and City Administrative Officer reports relative to potential ballot measures, revenue options to protect and invest in City services, and proposals for the June and November 2026 elections to increase General Fund Tax revenue.

Summary

The City of Los Angeles is proposing several new tax measures and exploring other revenue options to address recurring budget deficits, escalating service demands, and an eroding traditional tax base. The City Administrative Officer (CAO) recommends placing one or more general revenue tax options on the June 2, 2026, or November 3, 2026, ballots.

Proposed 2026 Ballot Measures:

• Sales (TUT) Tax: A 0.5% permanent increase to the local sales tax, estimated to generate $327 million annually.
• Transient Occupancy Tax (TOT): A 2.0% permanent increase (to 16%), generating $45 million annually, plus a temporary 2.0% supplementary charge (total 18%) from January 2027 to December 2028, yielding $89 million annually during that period.
• Parking Occupancy Tax: A 5.0% permanent increase (to 15%), projected to generate $67 million annually.
• Cannabis Business Tax Parity: Amending the tax code to apply to unlicensed cannabis businesses, estimated to generate $60-80 million annually.

These measures aim to strengthen fiscal stability and preserve core services, including a $300 million annual commitment to homelessness services without a dedicated source. The City faces significant costs from the Palisades Fire (billions in property losses) and upcoming mega-events like the 2028 Olympic Games.

Other Revenue Options for Future Study:
The CAO also recommends studying a Major Event Tax, Shared Ride Tax, Vacancy Tax, and Retail Delivery Fee for potential future ballots, with funding up to $100,000 per study. Additionally, the City is considering modifying the Vacation Rental Ordinance (C.F. 18-1246) to increase caps and implement an application fee, expanding the Smart Curb Management Program, and redirecting Metro Transportation Communications Network (TCN) revenue for citywide transportation projects.

Citizen Impact

These proposals could lead to increased costs for residents and visitors through higher sales tax, hotel stays, and parking fees. The new revenues are intended to prevent cuts to essential city services, fund critical needs like homelessness interventions, and invest in infrastructure repairs ahead of major international events. Changes to vacation rental policies and a potential vacancy tax could also impact housing availability and costs.

Confidence

high