Taxes & finance
Council reconsidering the 0.5% Measure C sales tax it directed in July
City Council · August 18, 2026
Less than six weeks after directing implementation of a 0.5% Measure C sales tax on July 7, the City Council put the decision back on the table. At its August 18 meeting, members discussed possibly suspending the half-cent tax before collection begins, and directed staff to schedule a formal suspension vote at a future meeting.
No suspension has happened yet. But the direction signals at least some council members have reservations. The tax would add 50 cents to a $100 purchase — or $5 on a $1,000 appliance.
Watch the next council meeting agenda for a suspension item. If the tax is suspended before the CDTFA filing deadline, collection would not begin on October 1.
What we know
- July 7, 2026: Council directed implementation of a 0.5% Measure C sales tax.
- August 18, 2026: Council discussed suspension; directed staff to schedule a future vote.
- No suspension vote has been taken yet.
- Collection target date: October 1, 2026.
Background
Measure C is El Segundo's own transactions-and-use tax, approved by voters in 2018. Issue #2 tracked the council's May 19 vote directing the CDTFA to prepare for collection of the full 0.75% rate. The July 7 action — directing a 0.5% rate — and this August discussion represent a subsequent development. The relationship between the 0.5% July 7 action and the earlier 0.75% direction has not been confirmed in available official records.
Rabbit Hole
Measure C was designed in 2018 as a protective mechanism — a way to capture local revenue before LA County could claim the same tax headroom. Voters approved it 83-17. The trigger: LA County voters also had to approve a county-level tax. That trigger appears to have been pulled.
LA County Measure ER — a half-cent sales tax for five years, exempting groceries and medications — led with 50.59% as of Tuesday night, above the simple majority threshold required. If certified, El Segundo's protective play was exactly right. The question before the council now is whether to collect the revenue voters authorized, or walk away from it.
Why El Segundo created Measure C
California sales tax has a ceiling. Until recently, the combined rate of state, county, and city district taxes couldn't exceed 10.25%. El Segundo's rate in 2018 sat at 9.50% — leaving exactly 0.75% of legal headroom. That gap is what Measure C was designed to occupy.
The logic: if LA County placed a sales tax on the ballot and voters approved it, the county would sweep up that 0.75% headroom across every city that hadn't already claimed it. Money collected in El Segundo would flow to the county and be distributed regionally. But if El Segundo had its own 0.75% local tax already filed with the state, the city would collect that revenue itself — keeping it local. The City Attorney's impartial analysis said it plainly: Measure C was a revenue-capture play.
One critical detail: the ordinance was written with a trigger condition. Collection would only begin after LA County placed a tax on the ballot and county voters approved it. Measure C couldn't be collected independently — it was legally linked to what the county did. Measure ER appears to satisfy that condition.
How the CDTFA process works
The state doesn't flip a switch. Once a city decides to implement a local tax, it must submit a package of documents to the California Department of Tax and Fee Administration: two signed administration agreements, a certified ordinance, a certified resolution, certified election results, and an EFT authorization for payments.
CDTFA needs up to 95 days of lead time. Collection can only start on January 1, April 1, July 1, or October 1. Miss the window for one quarter and you push to the next — there's no permanent forfeiture of the authority voters granted. If El Segundo suspends before October 1, 2026, the earliest collection could start is January 1, 2027.
Has this happened before?
The closest published precedent: Sonoma County and the City of Sebastopol, 2024–2025. Voters approved both a county measure and a separate city measure. Together, they would push the combined rate over the statutory cap — CDTFA said it couldn't administer both. The County Board of Supervisors approved an interim arrangement: Sebastopol would collect only 0.25 cents of its voter-approved 0.5 cent tax, with the county compensating the city for the uncollected portion.
That's a council choosing to collect less than voters authorized — before collection had ever started — because of statutory cap constraints. It's not identical to El Segundo's situation, but it's the clearest published precedent for a partial pre-collection suspension.
The open legal question
A city council can legally delay or suspend a voter-approved general-purpose transactions-and-use tax by not completing the CDTFA filing, or by passing an ordinance suspending collection. That much is established.
What's less settled: can a council permanently decline to collect a tax voters approved 83-17, without ever returning it to voters? Measure C's voter authorization doesn't come with a mandatory start date. The council arguably has discretion about when — or whether — to implement it. But doing so permanently, without a return to voters, sits in contested legal territory. No published California court ruling appears to have answered the question directly.
The resolution also matters: suspending collection (preserving the voter authorization for a future council to restart) is legally different from repealing the underlying ordinance (ending it outright).
Source: El Segundo City Council agenda, August 18, 2026, Item 23.