City Could Lose More of its Share of Tax Revenues Without New Tax Measure

Mayor Tornek sees ¾ percent measure as City’s ‘last chance’ for now, says he personally will campaign for passage of tax measure

Published : Monday, July 16, 2018 | 5:40 AM

[Updated]  Should Pasadenans not vote in favor of the City’s upcoming 0.75 percent sales tax increase in November, they would be abandoning Pasadena’s last chance for now to collect any more significant State or County tax revenues, says Mayor Terry Tornek.

This assumes, of course, that Pasadena’s City Council moves ahead tonight with final plans to place the tax measure on next November’s ballot.

That’s important, Tornek has said, because the City needs significant revenues to face a projected budget deficit due to hit as soon as next year.

State law prohibits cities from charging more than 2 percent in total City sales tax, and Pasadena is exactly 0.75 percent under that limit before it hits its sales tax ceiling.

As it stands, Pasadenans already pay out much more in taxes than the city gets back from taxing authorities. In recent years, Pasadena voters approved various Los Angeles County-sponsored tax measures only to see a mere 17% return for use in Pasadena, according to City accounting.

“In the case of the most recent sales tax measure, which was the Prop H measure about homelessness, there was about $7 million dollars collected in Pasadena, and we are getting less than $750,000 from that measure,” Tornek said.

Pasadenans pay out more in Los Angeles County-sponsored taxes than the City receives in return. Chart by the City of Pasadena

And the returns from some other measures are even worse, said Tornek.

“There’s Measure M, which was a transportation measure,” he said, “There’s $14 million collected here, and we get less than $2 million. So if the money is going to be ultimately landing on the sales tax, which I believe it will, we would be a lot better off if we capture 100 percent of it, than if we get 10 percent of it.”

Meanwhile, should the City not pass its own measure, another agency, such as the State or County, could impose a tax of 0.75 percent later this year or next and thus deprive Pasadena of the chance to assess any more tax to raise city revenues.

The new proposed City tax is the only way for the City to generate the revenues it needs to prop up the budget and bring proportionately more tax revenue back, say City officials.

The need for the tax measure, which would add approximately $20 million to City coffers yearly, is motivated by the City’s rising services and infrastructure costs, according to City Finance Director of Finance Matthew Hawkesworth.

“The key issues are maintaining essential city services and reinvesting in our aging infrastructure,” Hawkesworth said Friday. “The proposed sales tax is the means by which we would accomplish this.

“Our residents have told us in person and online,” continued Hawkesworth, “that maintaining essential services such as emergency 911 response, and Police and Fire services, is of critical importance to them. They also want us to fix our broken sidewalks, ensure that our streetlight systems work and ensure that in the wake of a significant earthquake, our fire stations and other essential service buildings will be operable. The proposed measure would allow us to accomplish those important things.”

Which would be the case with Pasadena’s own dedicated sales tax.

But should the county pass a new tax next year, said Tornek, “The money will go to whatever useful cause the county deems necessary. When you have one of these tax measures on a countywide basis, the amount that’s collected in the city versus the amount that’s distributed to the city, is vastly different.”

“Pasadena has a tradition of providing a high level of service, (but) the harsh reality is that given the sources of revenue and the demands on the city treasury, the revenue is not keeping pace with the expenses and it’s not because we’re not cutting, we continue to cut,” Tornek said.

“We don’t have enough money to do everything that people expect us to do.”

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