Lawsuit freezes spending of Measure ER sales-tax revenue

Los Angeles County said in a Sept. 30 news release that a lawsuit filed by the Libertarian Party of LA County has frozen the distribution of Measure ER sales-tax revenue; the half-cent tax will still be collected across the county beginning Oct. 1, but state law requires those receipts to be placed in an escrow account and not spent while the lawsuit is pending.

The county said Measure ER is projected to raise approximately $1 billion per year for five years and then expire; the Board of Supervisors adopted an initial spending plan that would allocate 45% of the taxes to a program serving low-income, uninsured residents through nonprofit clinics and outpatient providers and 22% to LA Health Services.

The county said LA Health Services expects to lose over $700 million in federal and State revenues by 2028; the release warns that hospitals and clinics counting on Measure ER revenue may need to find other funding, cut services or close if the lawsuit is not resolved in the county’s favor.

“For patients and families across LA County, Measure ER is a desperately needed lifeline. People do not stop needing care because funding disappears. They still need cancer treatment, diabetes and high blood pressure medications, prenatal care, immunizations, and a doctor when they are sick,” said Dr. Christina Ghaly, Director, LA Health Services.

“Measure ER was approved by voters at a time when Los Angeles County is facing significant cuts in federal funding that threaten the programs and services our communities rely on to stay healthy,” said Barbara Ferrer, Director of the Los Angeles County Department of Public Health. “Measure ER funds are intended to help fill the enormous gaps left by those cuts and protect critical public health services, particularly in communities that have historically had fewer resources and face the greatest barriers to health.”

The county said the plaintiffs are challenging the constitutionality of Assembly Bill 1768, the State law that allowed LA County to exceed the otherwise applicable sales-tax limit; the release said similar challenges have repeatedly been rejected by courts throughout the State.

County Counsel Dawyn R. Harrison said, "The County is confident in the validity of the Measure ER tax and has followed the law in every step of working with the State and presenting the measure to voters." The county said courts could take two years or more to decide the case; meanwhile residents will continue to pay the tax but no services will be funded with the newly generated revenue unless the lawsuit is withdrawn or resolved.

The release said the lawsuit does not change residents’ access to Medi-Cal or CalFresh benefits; the county noted those eligibility changes stem from H.R. 1, the federal law passed in July 2025, not from this case. If a court rules the tax invalid, the State will administer refunds and residents can check local sales tax rates at the California Department of Tax and Fee Administration, the county said.

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