Council Tables Sales Tax Ballot Measure Vote

Following long Council discussion, Mayor agrees that ‘more information is needed’

Published : Tuesday, January 30, 2018 | 6:29 AM

Council Tables Sales Tax Ballot Measure Vote

Despite his own call for such a tax in his State of the City speech earlier this month, Mayor Terry Tornek, after a long discussion with Councilmembers, suggested that the City Council take no vote yet on the recommendation to create a November ballot measure for a ¾ cent sales tax.

“We really don’t have all the information in yet,” said Mayor Tornek. “This needs a little more cooking. The staff needs to come back with more recommendations on various issues.”

Conceded Tornek, “It’s possible there are other revenue measures.”

According to a Finance Department staff report , the City has, since 2009, in order to balance the General Fund budget, spent down its reserves by $25 million, eliminated 123 staff positions including 23 sworn police officer positions, made ongoing annual reductions exceeding $19 million, and shifted over $5 million in annual pension costs to employees.

The City has also rebuilt and increased its General Fund reserve levels to meet the fund balance policy goal of 20 percent, totaling more than $47 million as of June 30, 2017, through the use of one-time or limited-term revenues.

In addition, the City Council authorized the creation of an IRS Section 11-S Trust to set aside funds for future pension and other post-employment benefit liabilities with an initial deposit of $12 million.

But despite these efforts to secure the City financially, said the staff report, General Fund revenues are “not growing sufficiently to offset increases in operating costs, despite the positive national economy.”

The City’s General-Fund Five-Year Forecast still anticipates a “growing operating deficit out into the future.”

The City’s current year General Fund operating budget is $236.8 million, of which $41 .7 million is set aside for debt payments; the Pasadena Center Operating Company and the funding of the Library system as required by the Special Library Tax. Of the remaining $195.1 million, $116.6 million, or nearly 60 percent, is for Police and Fire.

Closing the budgetary gap would necessitate the continued close examination of existing City services, the staff report indicated. The Fire Department, for example, responds to approximately 19,500 unique incidents per year, nearly 80 percent of which are categorized as medical calls. Given the deployment and staffing arrangements for the department, there are limited opportunities to reduce costs, said the staff report.

“Layoffs are the last thing I want to do,” said City Manager Steve Mermell.

Thus, in his State of the City address two weeks ago, the Mayor said he would call for a new sales tax measure, which would need to be prepared by the end of June, to be ready for the November 2018 election.

A sales tax measure would be implemented through the voter approval of a Transaction and Use Tax district. State law provides that cities may form one or more transaction and use tax districts as long as the total tax levy, including the rate of countywide districts, does not exceed two percent.

According to the State Board of Equalization, agencies in Los Angeles County that do not currently have a transaction tax, have the ability to approve a tax measure up to three-quarter percent without the need for special legislation.

Much of the discussion centered around “conservative revenue projections” and the fact that, as envisioned, one third of the anticipated tax revenue would be distributed to the Pasadena Unified School District (PUSD), an idea that worried some of the Councilmembers.

Saying, “We have a responsibility to the voters,” Councilmember Victor Gordo added, “There should be a clear reporting mechanism of PUSD’s spending.”

Tornek responded, “We should not dictate to the School Board. We are not giving them the money. The voters are.”

Said Councilmember John Kennedy, “I don’t want to make any decision that doesn’t advance our relationship with the PUSD.”

The Mayor asked the staff to return to the Council at a later date with more information, including updated revenue projections, which City Manager Steve Mermell said he would be “happy to provide.”

 

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