New City Sales Tax Measure Approved for November Ballot

The Pasadena City Council early Tuesday morning approved placing a .75 percent municipal sales tax measure on the November 2018 ballot. The motion passed unanimously.

The tax, if approved by voters, would raise the City’s sales tax rate from 9.5 percent to 10.25 percent.

At that, Pasadena would join Long Beach, California, and Chicago, Illinois, as imposing the highest combined state and local sales tax rate in the United States, according to a 2017 report by The Tax Foundation, an independent tax policy nonprofit.

City Manager Steve Mermell reported to the Council, the City “will have to cut millions and millions from services” without the tax hike, which would amount to ¾ of one cent out of every dollar spent in the City.

The sales tax measure would add an additional $20 million a year to the City’s coffers. The Council also approved an “advisory” ballot measure that would pass along one-third of the revenue from the sales tax to the Pasadena Unified School District.

“All we are doing tonight is asking the voters, ‘Are you interested in this?,” said Councilmember John Kennedy. “We have got to do something. Cuts in the budget continue to rise.”

Addressing the home television audience, Kennedy also asked, “Will you work with us?”

“This is an easy call,” said Councilmember Victor Gordo. “We need to give the voters a chance to keep Pasadena dollars in Pasadena.”

Not all Pasadenans support the idea of the tax or of its being put onto the ballot.

Michael Alexander, of the Pasadena-based California Tax Limitation Committee, said he was enraged by the idea of a sales tax increase.

“The City of Pasadena, like all cities, is completely out of control fiscally. Pasadena and other cities throughout California pay very high salary and benefits,” Alexander said ahead of this morning’s vote.

“The median full-time salary and benefits package for public employees is $120,000 per year,” Alexander said. “I have no doubt that Pasadena’s employment or paid benefits are in that same category. At the same time, the City of Pasadena has run up a very large pension debt which it has yet to pay and has taken no meaningful steps to control or eliminate this debt.”

State law currently prohibits cities from charging more than a total of 2 percent in City taxes, and Pasadena is exactly $0.75 under that limit before it hits its the 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 sales 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,” Mayor Terry Tornek pointed out before the vote.

If voters approve the new tax measure in November, Tornek explained, the City would be able to get back 100% of the revenue for that last available .75 percent allowance before another taxing agent used it for a different tax, which returns far less to the City.