Palo Alto City Council
September 29, 2025
Impact of Federal Budget Cuts
and the County’s Response
County of Santa Clara 1 of 12
H.R. 1 Overview
H.R. 1, or the “One Big Beautiful Bill Act,” is the federal budget reconciliation bill that was signed into law by President Trump on July 4, 2025.
Enacts the largest cuts in our nation’s history to Medicaid (known as Medi-Cal in CA) and food assistance (CalFresh in CA) to help fund tax cuts primarily benefitting the wealthiest Americans.
Medicaid is a critical social safety net program that provides healthcare coverage for nearly 1 in 5 Americans. Approximately half of all children in the United States are covered by Medicaid.
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1 in 4 County residents rely on Medi-Cal
133,000 residents rely on CalFresh for food assistance
H.R. 1 Creates a County Fiscal Crisis
Medicaid is the single largest source of federal funding for the County, totaling $2.3 billion in FY25-26.
Medi-Cal funding accounts for more than half of all revenue for Santa Clara Valley Healthcare (SCVH), the County's healthcare delivery system. The County expects $1 billion in lost revenue per year, representing a significant portion of the $4.6B total annual budget for Santa Clara Valley Healthcare This is a devastating and destabilizing level of cuts that can only result in extraordinarily harmful service reductions if not addressed.
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Projected Impact to County Revenues (Summary)
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Santa Clara Valley Healthcare operates 4 hospitals and 15 major health centers in Santa Clara County and is the largest provider of many critical healthcare services to all residents:
Provides care for nearly 1 in 4 Santa Clara County
residents.
Largest provider of both Medi-Cal and Medicare hospital services to Santa Clara County residents.
Operates 2 of only 3 trauma centers in Santa Clara
County
Only Burn Center in Santa Clara County and 1 of only 3 regional centers of its kind between Los Angeles and the Oregon border.
Top ranked Rehabilitation Center on the entire
West Coast.
H.R. 1 Threatens Access to
Healthcare and Local Hospitals
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6 San Jose is home to 3 of 4 County hospitals (with 2 trauma centers and 1 burn center) and 10 of 15 major health centers.
Local Emergency Room Capacity is at Risk
Santa Clara County has limited ER beds. Santa Clara Valley Healthcare provides critical capacity that is already stretched thin.
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If County emergency bed capacity is
significantly reduced, other local
hospitals will be overwhelmed.
Every 11 minutes a 911 call results in
someone being transported to
a County hospital.
Nearly half of all ER visits in Santa
Clara County are at County hospitals
(750 visits per day).
80% of trauma cases are taken to
a County hospital.
Only counties with population over 500,000 shown on graph H.R. 1 Puts County Services at Risk
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Federal cuts of the magnitude we face present a major risk to all County services from public safety to homelessness.
A $1 billion funding shortfall is too significant for Santa Clara Valley Healthcare to absorb on its own.
6,485 residents rely on Medi-Cal
Nearly 10% of Palo Alto’s population
Opened Valley Health Center North County, the
first County clinic in Palo Alto. Offers walk-in urgent care services for all ages, family medicine, on-site
laboratory, radiology, pharmacy, and other
services.
Capacity to provide 14,000 visits annually.
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Community Impacts: Palo Alto
HEALTHCARE
31,600 COVID vaccinations provided to Palo Alto
residents during height of the pandemic, regardless
of health provider or insurance
25% of Palo Alto residents received their
COVID vaccine from the County during this period
DISASTER RESPONSE
HOMELESSNESS
FOOD ASSISTANCE
1,755 residents rely on CalFresh to put food on
the table
285 households served by permanent supportive
housing programs in past year
234 households provided shelter/temporary
housing in past year
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County’s Response to H.R. 1
To address the extraordinary fiscal emergency caused by H.R. 1, the County is taking swift, proactive steps in several areas. 9 Reducing Costs and Increasing Revenue
Seeking State Support
Pursuing Local Solutions
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➢ On August 7, 2025, the Board of Supervisors unanimously voted to place an emergency, temporary general sales tax measure of 5/8 of a cent on the ballot. If approved, the tax would be in place for five years and generate $330 million in revenue each year. ➢ The County has very limited options for raising local revenue for services.
Unlike cities, counties can only enact taxes that have been affirmatively authorized by the State.
➢ SB 335 grants the County temporary authority to provide voters the option to raise local sales taxes by 5/8 of a cent for County services.
➢ Measure A does not affect the ability of any city to propose a sales tax measure to their voters.
➢ Under state law, common household expenses (e.g. rent, groceries, utilities, childcare, etc.) are exempt from sales taxes. es10
County’s Response
Measure A
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Summary
Our community is facing a true healthcare emergency caused by the federal government. The crisis will hit us soon and worsen in the next few years. The County's hospital and health clinics will be hit hardest, but other critical County services – such as mental health care and public safety – are also threatened. Everyone's care is at risk, as closure of trauma centers or emergency departments increase wait times and affect patient care regardless of what insurance you have or which hospital is nearest to you.
Even if the temporary sales tax passes, the County will have to make hundreds of millions of dollars in service cuts to address a $1 billion+ shortfall. Over the next several years, we need to come together as a community to chart a path forward that ensures the health and well-being of our residents, especially those most in need.
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Thank You
Visit scc.info/federalfunding for more information
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