The Pasadena City Council voted unanimously to place a three-quarter cent sales tax increase on the November ballot that could raise millions of dollars to maintain city services and potentially save the local school district, which is currently teetering on the brink of fiscal insolvency.
The Pasadena Infrastructure/Community Essential Services Protection Measure could generate $21 million a year for essential services, including public safety, according to a city staff report on the measure.
Mayor Terry Tornek called for the tax increase earlier this year, saying he wanted to turn over one-third of those funds to the Pasadena Unified School District.
The district would get that help through a second measure that would ask voters to decide if the city should prioritize assisting the school district.
“All we are doing tonight is asking the voters, ‘Are you interested in this?’” said Councilman John Kennedy. “We have got to do something.”
City expenses will exceed revenue by $3.5 million next year. In 2017, the city took in $237 million in revenue, with more than $100 million going to public safety.
If the measure passes, the city’s sales tax would rise from 9.5 to 10.25 percent, which concerns the Chamber of Commerce.
“Those who sell high-end and expensive items may be priced out of a very competitive market, especially for automobiles, computers and appliances,” wrote chamber CEO and President Paul Little. “If you tax these items to a point where our sellers are not competitive, you may also reduce tax revenues to the city. If it appears that I can save a few hundred dollars or more by purchasing a car 20 miles away, why wouldn’t I do that?”
Little said the Chamber of Commerce has not yet made a decision on supporting the tax increase.
According to the wording of the measure, the tax increase would “maintain essential city of Pasadena services such as fire, police, paramedics, emergency service/response times; keep fire stations open; improve neighborhood and school safety; repair streets/sidewalks; address homelessness; maintain after-school programs/senior services, and other general fund services by establishing a [three-quarter cent] sales tax providing approximately $21 million annually until ended by voters; requiring audits and all funds locally controlled.”
If the measure passes, Pasadena would be among cities imposing the highest local sales tax rates in the nation.
Other residents also were concerned about raising the sales tax and giving money to the school district.
“I draw the line at an increase in sales tax,” wrote Mary Foltyn. “The city should be earning from the Rose Parade, the Rose Bowl games, hotels, conventions, concerts, etc.”
The city has rejected potential revenue builders over the past several years, including the NFL temporarily playing in the Rose Bowl, a move that could have generated millions of dollars per year.
The measure also connects the tax increase to local schools and asks voters prioritize a big portion of the money to the school district with an “accessory” measure that reads: “If Pasadena voters approve a local sales tax measure, should the city use [two-thirds] of the measure’s annual revenue to maintain essential city of Pasadena services such as fire, police, paramedics, emergency service/response times; keep fire stations open; improve neighborhood and school safety; repair streets/sidewalks; address homelessness; maintain after-school programs/senior services; with the remaining [one-third] of the measure’s revenue going to support Pasadena public schools?”
The school district could be $12 million in debt in two years which could force another round of school closures and layoffs.
Earlier this year the Los Angeles County Office of Education (LACOE) warned the district, that they would be forced to take over if district officials could not make the necessary cuts.
The district faces a $3 million budget deficit for the 2019-20 school year, and a $12 million shortfall for 2020-21.
Earlier this year, the board of education voted to eliminate 139 full-time employees — 87 of those positions held by teachers — to close a $6.9 million gap via current year reductions and revenue increases. The board cut another $14.2 million in reductions for the 2018-19 school year beginning in September.
Despite the precarious situations, local residents were not enthusiastic about raising taxes to help the schools.
According to a city survey, most residents considered using the money for first responders as the top priority. Addressing homelessness, repairing local streets and roads and maintaining vital health services were also prioritized ahead of supporting quality neighborhood schools, followed by improving local math, reading and science programs and sustaining afterschool and summer youth programs.
“The PUSD pleads that it really needs more money,” wrote Cliff Cates. “But the district plea reminds me of the boy who, having just been convicted of murdering his parents, pleads for money on the [grounds] that he is now an orphan. If the city were to give the district more money without first demanding real reforms first, why should it expect a different result this time around?”
Tornek first called on the increase during January’s annual State of the City Speech in which he called the tax increase the “Big Ask” after telling the audience he had tried telling people the day was coming when the city would no longer be able to rely on its current sources of revenue to pay its bills.
According to the city staff report, some of the basic needs include: upgrading fire stations to current operational and safety standards, replacing obsolete 911 emergency response communications, replacing 17,000 street lights on old, failing high-voltage circuits to safer, more reliable low-voltage circuits and repairing more than 670,000 square feet of damaged sidewalk.
More than 4,000 curb ramps will be redone in compliance with Americans with Disabilities Act standards and aging libraries, community centers, bridges and emergency shelters will also be upgraded.
In recent years, Pasadena residents have voted in favor of four half-cent tax increases and one quarter-cent county tax increase.
“Another major benefit of adopting a local sales tax is that it will ensure that all funds are controlled and spent locally,” the city’s staff report states.