Campbell sued over sales tax hike

Campbell is facing a lawsuit over a sales tax measure resoundingly passed last November.

The Silicon Valley Taxpayers Association, along with Campbell resident David Wolen, is suing Campbell over Measure K, a half-cent sales tax approved by 72 % of voters. The measure raises the city’s sales tax from 9.375% to 9.875%, the highest in Santa Clara County. It takes effect April 1 and will raise $7 million annually to help ease some of the city’s financial strain.

The lawsuit alleges Measure K is invalid because it’s based on Assembly Bill 3259, which it claims is unconstitutional. The bill passed last September and allows Campbell, Pinole and Solano County to hike their sales tax above the 9.25% state limit. The lawsuit claims AB 3259 violates California’s constitutional code that calls for uniform policies.

Jason Bezis, the lawyer representing the taxpayers association and Wolen, said Campbell’s financial status doesn’t justify the increase. The lawsuit, filed Jan. 6, asks Measure K to be declared void or invalidated, in addition to reimbursement of any funds the tax collects.

“It’s one thing to say the city of Campbell has a fiscal crisis right now, but it’s quite another to say we need money in perpetuity, especially when my understanding is other cities are also in the same (position),” Bezis told San José Spotlight.

The Silicon Valley Taxpayers Association did not respond to requests for comment. Wolen declined to comment.

Measure K was designed to help stabilize Campbell through anticipated deficits after the city faced a roughly $5 million shortfall for fiscal year 2024-25, according to officials. The measure also aims to fund the upkeep of community amenities, while addressing aging infrastructure and public safety.

City Manager Brian Loventhal said Campbell has hired legal counsel to fight the case. Officials are confident the city did nothing wrong. If the lawsuit voids the tax, Loventhal said the city will adjust the percentage as needed and look for a way to reinstate the tax.

“Two-thirds of our state legislature approved of it. Our governor signed it,” he told San José Spotlight. “Our voters approved Measure K itself at 72%, but yet you can have a special interest group like this attack that and affect the greater voice of the public. It is frustrating.”

Neighboring West Valley cities, including Los Gatos and Cupertino, chose not to place a sales tax increase on the November ballot because of poor public reception. Los Gatos’ sales tax rate is 9.25% and Cupertino’s is 9.125%. After Measure K takes effect, San Jose and Milpitas will have the second highest sales tax rates at 9.375%.

Some Campbell residents viewed the tax hike favorably.

Campbell resident Jackie Costanzo, who has lived in the city for more than 41 years, said she voted for the tax to maintain her quality of life amid rising costs.

“I’m a big believer that you get what you pay for,” she told San José Spotlight. “Obviously, not everything is perfect in Campbell, (with) crumbling curbs and (needed) traffic calming measures, but overall we voted to keep things at least at the level they are presently.”

Others agreed more with the tax association and Wolen.

Campbell resident Raja Pallela, who’s lived in the city since 2018, didn’t support the measure. He said higher costs from the tax bump could lead him to shop in San Jose for larger purchases.

“(Addressing the city’s finances) could have easily been done by looking at where we are, where the spending is, and adjusting from the current spending,” Pallela told San José Spotlight.

Contact Annalise Freimarck at [email protected] or follow @annalise_ellen on X.