Should Costa Mesa voters approve Measure C? (November 3, 2026 ballot)

What's this about?

People disagree about whether Measure C would make Costa Mesa’s business tax fairer without hurting the local economy.

It would keep current rules for small firms and raise taxes on larger firms.

What supporters say

• The change could fix an unfair gap, where small firms may pay a bigger share than large firms.
• The measure could give the city money it controls for safety, roads, parks, and other needs.
• New money could add support to a city budget that already faces many costs.

What critics say

• The money raised is not clear because two city estimates give different totals.
• A tax on sales, not profit, could change how firms set prices, hire staff, or make other choices.
• Some firms might pass the added cost to buyers or workers.

How to read this

The number of points on each side does not show which side is right; strong proof matters more.

Measure C would change Costa Mesa’s business-tax system by leaving businesses with $500,000 or less in gross receipts under the current rules, while applying a new tax rate and higher maximum charge to larger businesses. Supporters say it would make the system fairer and provide flexible revenue; opponents warn that taxing sales rather than profits could affect prices, jobs and business decisions.

The case for

The measure has a credible fairness rationale. Under the current system, the maximum business tax is $200. That can mean smaller businesses pay a larger share of their gross receipts than much larger firms. Measure C would generally charge 50 cents for every $1,000 in gross receipts above the $500,000 threshold, with a new annual cap of $15,000. Businesses at or below the threshold would not pay more, and the official analysis says more than 72% of existing businesses would remain under the same structure. Still, the available material does not independently show the actual tax burden faced by businesses under either system. 1

The measure would also create locally controlled general-fund revenue. The ballot question estimates about $5.6 million a year, while the city’s impartial analysis estimates about $4.6 million. The money would not be legally dedicated to one program, allowing the city to use it for public safety, streets, parks, homelessness prevention or other priorities. Annual spending disclosures and audits would provide some transparency. 2

That flexibility could help diversify a city budget that relies substantially on sales-tax revenue. Costa Mesa’s adopted budget lists public safety, streets, parks, facilities and housing as major operating and capital priorities, so additional revenue could help address existing demands (see Figure 1). But this remains a fiscal possibility, not proof that the new tax would stabilize city finances in practice. 3

The case against

The strongest concern is that gross-receipts taxes can influence business behavior because they apply to sales rather than profits. Research and policy reviews identify possible effects on how firms organize, whether they produce goods themselves or buy from other companies, and where they operate. A peer-reviewed study of Washington’s recreational cannabis industry found that a gross-receipts tax affected vertical integration and production efficiency. Those findings show that this type of tax is not always economically neutral. But they do not establish the size of the effect under Costa Mesa’s lower proposed rate, $15,000 cap or local business mix. 4

Businesses might also pass some costs to customers or workers through higher prices, lower wages or reduced margins. They could change suppliers or reconsider expansion and location decisions. However, the available evidence does not show how much of Measure C’s cost would be passed on locally, or whether those changes would significantly reduce economic activity. 5

The measure’s fiscal case is weakened by the unresolved revenue discrepancy. One official source projects approximately $5.6 million annually; another projects approximately $4.6 million. The supplied materials do not provide a detailed calculation explaining the difference. They also do not show how many firms would be affected, how close those firms are to the threshold, or how the charge would compare with their profits and existing tax burdens. 6