As Pasadena faces a looming budget crisis, City Council voted early Tuesday morning to put a sales tax hike on the November ballot.
Along with deciding whether to raise the sales tax from 9.5 percent to 10.25 percent, voters will be asked whether one-third of the revenue should go to the Pasadena Unified School District. While the first vote would be binding, the second would merely be used to measure voter interest in the idea.
If the sales tax is approved, the City Council will then decide whether to give some of the funds to PUSD based on the second vote.
The City Council has discussed the possibility for more than a year, although many council members have been hesitant to give the idea their full-throttled support. Councilman Steve Madison, in particular, has voiced his concerns in previous meetings, saying he didn’t feel there was a “sense of urgency” among residents that demanded such a drastic move.
Still, he, along with the rest of the council, unanimously decided to put the question on the ballot. Ultimately, council members said it’s important to distinguish that their vote is not to raise taxes but to ask voters to make that decision.
“I think this is the right way to proceed,” Vice Mayor John Kennedy said. “It’s not the most comfortable way to proceed — I’m not an advocate of just raising taxes willy-nilly — but to the voters. … This is our wisdom shared with you to say, ‘Let us know what you think in terms of solving some of these knotty issues that we have to undertake.’”
Those “knotty issues” include rising pension costs. Like other cities statewide, Pasadena’s share of covering employee retirements has grown while without a corresponding revenue increase to fill in the gap.
Pasadena has made budget cuts year after year in the wake of the Great Recession, and City Manager Steve Mermell said it’s becoming difficult to find more “low-hanging fruit” to trim without residents feeling the impact.
Earlier this year, reductions were considered in the police and fire departments because of a budget shortfall. Some, but not all, of those cuts were eventually approved. Mermell said that without a new source of income, those kinds of tough decisions will become even more frequent.
During his presentation Monday night, Mermell said there are other reasons why the council should act now. He pointed to a state-mandated cap on local taxes, which essentially leaves cities and counties racing to get what they can before that cap is reached.
Because of countywide Measures M and H, which designated sale tax bumps for transportation and the homeless respectively, there isn’t much room left for Pasadenans to be taxed further before the city reaches its cap. The November measure would meet that limit, meaning residents couldn’t be taxed further by the city or the county without state-approved intervention.
Mermell said he worried that if Pasadena didn’t act on this now, Los Angeles County could put another countywide measure on the ballot that would prevent the city from keeping its tax dollars within its own borders.
He spoke in particular about Measure H as an example, in which the city has estimated it will provide $7 million in taxes but will receive less than $700,000.
Councilman Victor Gordo said he found that point particularly persuasive.
“Let’s give voters in Pasadena an opportunity to keep Pasadena dollars in Pasadena … rather than take the chance that the county will step in and take the remainder of the cap,” Gordo said. “We’ve seen what the county’s track record is. Those dollars don’t work their way back to our city.”
