In 2017, California raised the gas tax by 12 cents per gallon to rescue a deteriorating road system. That measure generated $1.5 billion annually for cities and counties to repair roads, according to CalMatters. But the political price was equally clear: a year later, former state Senator Josh Newman lost his reelection bid, becoming a classic cautionary tale for any California politician contemplating new taxes. Nearly a decade on, cities in Orange County are repeating that gamble — except this time, the budget crisis has become so urgent that few alternatives remain.
This summer, many Orange County cities entered budget season facing structural deficits of millions of dollars, and at least five cities — Costa Mesa, Fullerton, Orange, Santa Ana, and San Clemente — have had to consider tax increases or extensions on the November ballot, according to Voice of OC. This is not unique to Orange County. In Orlando, Florida, Orange County Sheriff John Mina was forced to cut his initial $508 million budget request down to $470 million after Mayor Jerry Demings asked him to trim it — partly because a proposed state property tax amendment is expected to cost the county $165 million in lost annual revenue, according to Orlando Sentinel. In Illinois, the Champaign County government released a non-binding poll, directly asking voters: raise taxes or cut jobs, according to WANDTV. From the West Coast to the Midwest, local governments across America are simultaneously pushing their toughest fiscal decisions to voters — a strategy that shares political risk but also signals that city councils have exhausted easy options.
California voters are not reflexively opposed to taxes, but they punish very clearly those proposals that lack concrete benefits.
Costa Mesa and the Price of 40 Years Without Adjustment
Costa Mesa offers the clearest example of how delaying tax reform can accumulate into an enormous problem. The city's business license tax has not changed since 1985 — the maximum cap remains at $200 per year, regardless of business size, according to Voice of OC. With that outdated tax rate, the city collects only about $1 million annually while facing a projected deficit of nearly $2 million in fiscal year 2027-2028, which could balloon to nearly $5 million by 2029-2030.
The Costa Mesa City Council voted 5-2 on March 17, 2026 to raise the business license tax cap to as high as $15,000 per year for businesses with gross revenues exceeding $30 million — a group of only about 120 businesses but projected to generate $5.6 million in annual revenue for the city. Two council members, Jeff Pettis and Mike Buley, voted against it. Notably, the city had previously considered raising the hotel tax but withdrew after local hotel owners objected — a detail showing how organized, well-resourced interest groups typically prevail in budget debates, while the burden ultimately falls on larger businesses with less collective voice to resist.
Orange: From Failed Measure Z to Potential Bankruptcy in 2029
If Costa Mesa shows the effects of four decades of delay, Orange City tells the story of a recent political failure that still haunts its city council. In 2024, Orange voters rejected Measure Z — a measure that would have raised sales tax by 0.5 percent for 10 years, according to Los Angeles Times. Two years later, consultants hired by the city warned that Orange could face potential bankruptcy as early as 2029 without changes, and they recommended a 1 percent sales tax increase as a short-term revenue solution.
The Orange City Council has failed to reach consensus on placing this 1 percent sales tax measure on the ballot three times in a row, largely stuck on the duration question — 10 years, 12 years, 15 years, or 20 years. Mayor Dan Slater favored 10 years, while council member Jon Dumitru wanted 12 years; a vote requiring a two-thirds majority of the seven-member council for the 12-year proposal fell short by exactly one vote. The city ultimately had to postpone the decision to the next meeting, while the deadline to place a measure on the November ballot was July 14. If approved by voters, this 1 percent increase could bring in approximately $37 million annually for the city's general fund — a figure large enough to explain why the council was willing to let an internal debate over a difference of a few years stretch across three consecutive meetings.
The difference between Orange in 2024 and Orange in 2026 lies in the degree of urgency. A rejected tax measure when the budget still has room to maneuver is ordinary politics; a rejected tax measure when the city faces a specific bankruptcy warning from its own hired consultants is a real fiscal risk. Orange voters this time will have to choose not between paying more tax or not, but between paying more tax or accepting that their city could become insolvent within less than a decade.
Santa Ana Chooses the Lower-Risk Path — but It Remains Steep
While Orange and Costa Mesa ask voters to approve new taxes, Santa Ana has chosen a different strategy: keep the current tax rate rather than let it decline. Measure X — a 1.5 percent sales tax that Santa Ana voters approved in 2018 — was originally scheduled to phase down to 1 percent over the coming years and disappear entirely by 2039, according to Voice of OC. The city is now asking voters whether it should maintain that 1.5 percent permanently, bringing Santa Ana's total sales tax rate to 9.25 percent — the highest in all of Orange County, according to Los Angeles Times.
Psychologically, asking voters to maintain a tax that has existed for eight years is typically easier to accept than proposing an entirely new tax, because it does not create the feeling of an "additional" burden on daily bills. This is also why Santa Ana's strategy has a higher probability of success than Orange's strategy, even though both are addressing the same type of structural deficit.
Who Bears the Cost, and Why Vietnamese Business Districts Feel It Most
Orange County is home to the largest Vietnamese American community in the United States, according to Saigon Sentinel, and most of the tax measures described above will directly impact areas with high concentrations of Vietnamese-owned businesses — from Westminster and Garden Grove to the business corridors around Little Saigon in Santa Ana. A sales tax increase does not discriminate by nationality or the customer's native language; it adds directly to the price of every bowl of pho, every item at the supermarket, every nail service. For small Vietnamese business owners already competing fiercely on price, an additional percentage point in sales tax could be the difference between keeping regular customers and losing them to a neighboring city with lower taxes — exactly the kind of calculation Westminster voters accepted when the city raised its sales tax to 9.25 percent two years ago without a set expiration date, according to Los Angeles Times.
As for Costa Mesa's business license tax measure specifically, the impact on Vietnamese-owned restaurants, salons, or small offices will be negligible, since the $15,000 cap applies only to businesses with gross revenues exceeding $30 million per year — a small group of about 120 businesses typically comprising large chains or corporations, not the typical family-owned operations in the community. This shows that not all tax measures on the ballot create equal burdens: sales taxes hit all consumer transactions, while tiered business license taxes selectively target large business segments.
Why Some Cities Choose Retreat Over Gambles
Not every Orange County city is betting on the ballot. Fullerton decided not to pursue a half-cent road repair tax and instead cut 35 vacant positions, reduced library hours, and decreased security at public facilities, according to Voice of OC. Laguna Beach also abandoned plans to place a hotel tax, business license tax, or sales tax on the ballot after its city council could not reach consensus.
This difference reflects a real political calculation: putting a tax measure on the ballot and losing is worse than not putting it on at all, because it exhausts the city council's political capital without solving the deficit. Cities with enough budget cushion to cut services — like Fullerton reducing library hours — choose the lower political risk path, even though the price is an immediate and direct decline in public service quality instead of a revenue measure that voters may not approve.
The 2017 Lesson Still Holds
The 2017 gas tax story teaches one thing that Orange County cities today must remember: California voters are not reflexively opposed to taxes, but they punish very clearly those politicians who attach their names to new taxes if the benefits are not communicated concretely. At the state level, another proposal is quietly reshaping the entire tax philosophy of transportation funding — Assembly Bill 1421, introduced by Assembly Transportation Committee Chair Lori Wilson, aims to study replacing the gas tax with a per-mile driving fee, after the California Transportation Commission estimates the state could lose up to $216 billion in road maintenance funding over the next decade, according to CalMatters. This bill is supported by both labor unions and the California Cattlemen's Association — an organization typically aligned with conservative interests — showing that when structural deficits are large enough, traditional political dividing lines begin to blur.
The tax measures in Costa Mesa and Santa Ana have clearer advantages over Orange: they either target a narrow group (large businesses) or merely maintain an already familiar tax rate, rather than imposing new burdens on all voters. By contrast, Orange is repeating the exact type of proposal that Measure Z faced when voters rejected it in 2024, only differing in fiscal urgency — and that urgency, while real, does not automatically translate into voter approval. If Orange cannot find a way to present the specific consequences of inaction — rather than simply repeating abstract bankruptcy warnings — the city's 1 percent sales tax measure risks following in Measure Z's footsteps, and when that happens, the 2029 bankruptcy warning will cease to be a consultant's hypothesis and become an actual crisis that the city council must confront through service cuts, exactly as Fullerton was forced to do before it faced its own moment at the ballot.