Strapped for Cash, Searching for Solutions: Mayor Says City Won't Have Enough Money to 'Provide the Standard of Service People Expect'

Published : Monday, April 16, 2018 | 5:11 AM

[Updated] Pasadena Mayor Terry Tornek said last week in what has become his traditional annual Rotary Club of Pasadena address that the City will not have enough money to continue providing the standard of service community members have come to expect.

Tornek described how a financial noose has tightened over the years around the City, while Sacramento’s increasing control of local governments reduces the City’s ability to control its own destiny.

“This is the year that we’re not going to have enough money to really support the services that we think we need. We’re at the place now where we cannot provide the standard of service the people expect and demand in Pasadena,” said the Mayor.

Tornek’s presentation shed light on how he views Pasadena in 2018, touching upon the City’s budget crisis, upcoming ballot initiatives, cannabis regulation, and more.

According to a finance department staff report, in recent years the City has implemented significant cost reductions including the elimination of 123 staff positions (of which 23 were sworn police officer positions); significant budget cuts exceeding $19 million annually, and pension reform which shifted over $5 million in annual pension costs to employees.

“For years, we’ve been trying to cut the budget — we’ve eliminated positions, we’ve shifted in some pensionless possibilities to employees and we’ve done a lot of things to try and live within our means because unlike Washington, we don’t get to print money,” said Tornek.

Based on current projections the City will need to reduce expenditures and associated service levels in the General Fund by $3.5 million in fiscal year 2019. Furthermore, additional reductions will be necessary in future years to maintain a balanced budget and avoid the need to draw down the City’s emergency contingency reserves.

“We have to generate another revenue source,” explained Tornek.

That source is a proposed 0.75 sales tax initiative that City Council has tentatively agreed to put it on the ballot for the November 2018 General Election that would ask voters to approve adding a 3/4 cent municipal sales tax to local purchases.

The local tax would be expected to generate approximately $21 million per year, to the individual consumer it would add only 0.75 of one cent to every $1.00 of taxable transactions, the staff report noted.

Tornek says the sales tax initiative is expected to generate $14 million per year for the City’s operating costs and $7 million for the Pasadena Unified School District.

“The school district is broke and many of us believe we can’t have a great city unless we have a great public school system,” said Tornek.

“The funding system they get from the State of California is impossible to deal with,” said Tornek.

Tornek says the sales tax initiative will be the subject of a “very active campaign” in the coming months.

“You’ll be hearing a lot about that and I’ll be promoting that this summer,” said Tornek.

Two additional initiatives that will be on the June 5 special election ballot are related to cannabis in the City of Pasadena in which two-thirds of the people in Pasadena voted in favor of legalizing for adult use last year.

“We do believe they should be approved and we will advocate for them,” said Tornek about the City’s upcoming cannabis ballot measures.

One of the ballot questions concerns the sale, distribution, and testing of cannabis in the City on a restrictive basis.

“It’s a very restrictive ordinance — tightly controlled,” said Tornek.

The second ballot measure relates to taxing cannabis operations in the City.

“This is not going to be the cash cow that some people might believe it could be, but there will be certain enforcement costs associated with it,” said Tornek.

“The state has left the specific regulations up to the City and in Pasadena, we were reluctant to be ahead of the curve on this. We felt we would like to learn from the experience of other cities and frankly, not the early adopters, but the industry,” said Tornek.

Tornek criticized of the state’s involvement in local government affairs dealing with land use development and says the State will preempt traditional local land use controls and practices if they invest in the City.

“We are confronted with this … onslaught or tsunami of state regulations that preempt local zoning controls and frankly, we’re really getting pissed off about it and we are feeling somewhat powerless,” said Tornek.

City officials concluded at last Monday’s City Council meeting that the creation of new defensive measures are needed to better deal with unexpected preemption of the local government’s authority, according to Tornek.

Tornek suspects this shift in power stems from the state’s low output of affordable housing production.

“There will be, I would predict, in the next sixty days, action taken by the City Council to try and come to grips with what we think is an emerging crisis,” said Tornek

On the other end of the spectrum of housing, Tornek says the City will generate tax revenue from a new ordinance that regulates the City’s rapidly increasing numbers of Airbnb-type short-term rentals.

The new ordinance language also requires hosts to register with the City and remit Transient Occupancy Tax (TOT).

The Planning Department said such taxes could deliver at least $600,000 a year to the City’s coffers.

The ordinance provides, among other things, an unlimited number of hosted stays, a 90-day cap on un-hosted stays, that rental units must be part of a primary dwelling or an accessory building within, that no whole-home vacation rentals and allowed, and that ensures self-inspections of rental units.

“It’s a subject of intense interest to the real estate community,” said Tornek.

While neighborhoods are dealing with the short term rental issue that gives out-of-towners a roof over their head temporarily, the City is battling a growing homeless problem.

“This is a big issue in Pasadena and throughout the region. We watched Orange County for the past couple of weeks and it’s really a cautionary tale,” said Tornek about the homeless encampment along the Santa Ana Trail riverbed where approximately a thousand homeless people lived and the City of Anaheim dismantled last month.

Even with the passing of Measure H which approved millions of dollars to address the homelessness crisis in the City and County of Los Angeles, Tornek says that won’t solve the underlying issue of homelessness in Pasadena.

“Beyond that, there’s going to be a continuing problem because some of the homeless population is service-resistant, which means that they’re not interested in accepting help,” said Tornek.

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