Pasadenans Weigh in on Mayor’s Proposed Sales Tax Increase

Mayor Terry Tornek’s proposal for a November ballot measure to create a 3/4 cent City of Pasadena sales tax increase has drawn the ire of some political groups and business owners while garnering support from Councilmembers.

The Mayor announced the proposal after detailing the City’s budget woes in his “State of the City” speech Monday evening, explaining that City expenses will outstrip revenues by $3.5 million yearly beginning in fiscal year 2019.

According to Tornek, a new city sales tax would raise $21 million annually and help generate capital funds to improve local fire stations and the like. One third of the revenue would be shared with the Pasadena Unified School District, as well.

The ballot measure would have to be approved by the full City Council before being placed on the November, 2018 City ballot.

Mayor Tornek attributed much of the city’s increasing costs to employee pensions, which will rise 100% over six years through 2021.

“It’s going from about 7% of our budget to about 14% of our budget,” Mayor Tornek told Pasadena Now Wednesday. “There’s nothing we can do about it. We’ve done what we can do. We have got the employees paying more than their share of the annual contribution required, but the CalPERS system has never achieved or rarely achieved the level of investment returns that they anticipated. So the annual cash contributions that the cities have to make continues to grow.”

The benefits being paid out have been earned contractually by the employees, courts have ruled, Tornek said.

“It’s an obligation that the city must pay,” he said.

Three Councilmembers with whom Pasadena Now spoke seemed to lend support to Tornek’s tax proposal.

Councilmember Margaret McAustin was sanguine about the idea of the tax increase.

“The budget problem is simple; our expenses are growing faster than our income. The Council is not willing to do deficit spending, so we either have to raise more revenue or cut services,” McAustin said. “The Mayor laid it out pretty plainly.”

“Our constituents have come to expect a high level of service, and in order to continue that level of service and make the necessary improvements to our infrastructure, we have to ask our residents to bear more financial burden,” McAustin continued.

As the councilmember conceded, “The city manager has managed the budget well, but in addition to increasing pension and employee costs we are required to comply with more and more regulation coming from Sacramento; there is a cost to that in terms of compliance and more and more of the costs we have to bear are out of our control. It’s frustrating, but I can assure you the City Council is committed to fiscal responsibility.”

Councilmember Andy Wilson agreed with McAustin, saying, “When you see the storm clouds coming you don’t wait until there’s a thunderstorm over your head. So I think it’s just good practice and I think that the Mayor has done a good job informing the public to stay with it, as much as we don’t like it. So given the circumstances of what we’ve done, I think it’s necessary to maintain the quality of core services in our city, as much as I hate to dip into people’s pocket books.”

According to Councilmember Tyron Hampton, making up the revenue deficit is up to the city residents.

“At the end of the day,” he said, “it’s really up to the people to pass the tax initiative, and if the people don’t pass the tax initiative, then we’re just going to have to get ready for the storm,that’s it. We got to be prepared this year for that. And so this year, there will still be some cuts that happen and that’s just the way it is.

“Salaries and benefits are extremely expensive,” Hampton continued, “And on top of that, people want their streets paved and sidewalks taken care of, right? They want these things and then when they call the city, they want someone to answer the phone. So there will be things that will be coming up in the budget discussion that I assume that the city manager’s taken a strong, hard look at.”

Michael Alexander, of the California Tax Limitation Committee, said he was enraged by the idea of a sales tax increase, exclaiming, “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.”

“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.”

Crown City hardware owner Richard Perris, who said he expects he will be affected by the proposed sales tax increase daily, took direct aim at City Hall, saying, “Governments don’t generate money, they spend it. The only thing they make are taxes, which tax and take money literally at a point of a gun from those businesses out there that actually make money. So they are a drain on the economy, especially when they make promises they don’t know how to keep.

Continued Perris, “When times are not good and money doesn’t come in to the government, what they do is they resort to the only thing they know how to gain money; and that’s the tax. They have no bearing or appreciation or concept of how that impacts our ability to make money. There’s no intuitive thinking involved. It’s the only thing they know how to do, involving taxes.”

Mayor Tornek was reflective Wednesday.

“This could be even worse than it is, but it’s not. So we’re in the range where I believe if we bite the bullet and impose this sales tax on ourselves that we will be able to sustain the increases and we can continue to maintain the level of services that people expect,” he said.