On the heels of the optimistic Pasadena Mayor’s State of the City Address, Business Leaders for Better Government notes Senator John Moorlach’s (R-Costa Mesa) annual 2019 Financial Soundness Rankings for California’s 482 cities, identifying Pasadena as one of the four worst cities in the State for managing debt.
Ranking Pasadena as the ninth worst city per capita with a population over 50,000, the report (https://moorlach.cssrc.us/sites/default/files/City_CAFR_Report_for_2019_Jan._2_2020_Moorlach.pdf) identifies the unrestricted net position of purely governmental activities for each resident as negative $2,510. So, for a family of four, multiply times four, or $10,040.
Revenue Streams Identified
Our Mayor identified the four biggest sources of revenue that account for more than half of the City’s revenue: property tax, sales tax, utility users’ tax, transient occupancy tax, and then everything else, with “new development and rising property values” continuing to be the primary source driving revenue increases. These are all areas Business Leaders for Better Government monitors.
However, from 2018 to 2019, the property, sales and utility users’ taxes only increased by $520,000, (www.cityofpasadena.net) a statistically insignificant amount, further underscoring that new developments and new retail sources are sorely needed for our City revenue streams. One Councilmember seems to think increasing parcel taxes make more sense when it comes to generating revenue. As if housing were not expensive enough, he seems blind to the impacts of his random thoughts from the dais.
In the last three years, new development in the city has been obstructed by votes of the City Council, often ignoring staff recommendations but relying rather on the input from local residential or historical groups, who remain critical of the level of city fire and police services, yet who staunchly reject the development and business projects that could create the critical fiscal revenue to fund them.
The City continues to roll over the Rose Bowl Operating Company debt of $175 million which was incurred to update the facility. Yet it has not yet been able to come up with a plan that covers the annual stadium operating cost and debit service requirement in the future.
While it is a new retail revenue generator, the cannabis retail sales industry, has not performed to expectation in other cities. However, Pasadena’s controversial permitting process may finally be getting support from unopposed candidate Councilmember Tyron Hampton. Moving forward with an amended process may provide the legal structure this potential revenue-generator needs.
Our leaders have (successfully) promoted taxing residents with an additional sales tax under Measures I and J in 2018 to help balance the City coffers, a measure which Business Leaders for Better Government opposed. Yet despite the new tax revenues, the revenue is a drop-in-the-bucket strategy for fiscal relief when our annual liabilities for CalPERS continue to rise from $29.3 million in FY 2014 to $58 million for FY 2020.
The additional Measures I and J sales tax brought with it the misguided bonus of underwriting the poor management strategies of the Pasadena Unified School District (which continues to have “transparency” problems between the seemingly autonomous, out-of-control staff and the rudderless PUSD Board). All the while talk of an $850 million bond to bailout PUSD from their ever-looming insolvency continues, a staggering figure that PUSD estimates would burden the average home-owner/taxpayer with an additional $274 per year for the next 32 years until 2052. This would constitute the biggest property tax increase on all real estate property ever in the history of Pasadena.
“But it’s for the children” is staff’s argument, making questioners seem unsupportive of education when critics ask the Board to identify a single specific project for a designated site to be accomplished on a particular schedule.
The Transient Occupancy Tax, a revenue the city could directly increase by approving new developments, only slightly increased last year. Sadly, Pasadena has built only three new hotels in the past 30 years and discouraged the Kimpton Hotel project that would have generated $45 million in TOT, sales and property revenue per year. There is simply no factual basis for Councilmembers who say “we have enough hotels” when the Convention Center is perpetually short on the number of rooms it needs to book bigger events, all of which would generate even more revenues for the City.
Be on the lookout. Proposals about an increase in parcel taxes and in utility taxes paid by every homeowner and business may be next. That Pasadena already has one of the highest taxes and fees schedules in the State is of no concern to certain locals and City Council members.
What will new leaders do? Outsiders vs. Insiders in City Council Districts
Mayoral candidates for the March 3 Primary Nominating Election are long on rhetoric and short on specific solutions. One candidate opposes development (despite voting for it for 15 years) and has proposed redoing the General Plan to downzone developable properties. Ignoring that such actions are prohibited by State Laws, as far as he is concerned, the City should incur the expense of suing the State.
From their website platforms, one candidate opposes “overdevelopment” as a way to ensure quality of life, but at least seems more fiscally responsible; one candidate focuses only on the Northwest, which is good but misses the bigger picture on our City’s debts; and, one candidate’s platform includes making Pasadena more “business friendly” without explaining how. Bad actors, conflicts of interest and ‘dark money’ influence are very visible, with one candidate even suggesting a vote for him might get you a salary increase.
Independent and new District candidates carry the stigma of being ‘outsiders.’ But their original information and proposals are in the public interest. What we need is for all candidates to produce content using indisputable data, expert analysis on the issues that we care about most while improving their disclosure and accountability. To have better government, we need solutions and new revenue streams in the city; and we need to reign in the undisciplined PUSD School Board to keep Pasadena’s education and government solvency off the Moorlach report.
*Business Leaders for Better Government describes itself as a nonpartisan PAC dedicated to maintaining a healthy and viable business community in California. “We believe in supporting any candidate from any party and any policy or measure that aligns to our core issues of economic development and sustainability. We identify candidates, policies and measures slated for the 2020 election cycle that support business creation and growth.” The organization’s Facebook page is online here.