Council Considers New Tax Measures That Could Raise Up to $30 Million a Year

The Pasadena City Council on Monday will weigh whether to advance one or more new tax measures for the Nov. 3 ballot, taking up a Finance Department report that lays out five revenue options and asks the Council to direct which, if any, staff should draft into ballot resolutions.

The item is a request for direction, not an enactment. Staff is not asking the Council to adopt a tax or place a measure on the ballot Monday, but to signal which options to develop, with final ballot documents due back at a July 27 or Aug. 3 meeting ahead of Los Angeles County’s Aug. 7 deadline to qualify for the November ballot.

According to the report, prepared by the Department of Finance and approved by Interim City Manager Matthew E. Hawkesworth, all options remain preliminary.

Staff laid out five options, each with a rough annual yield: a quarter-cent Transaction and Use Tax at about $11 million; a 10% Tax on Parking Occupancy at about $5 million; a Real Property Transfer Tax, at an accumulated rate of up to 1.5%, at about $26 million; a modernized Business Tax adding an estimated $10 million to $15 million; and a Parcel Tax for fire services and street maintenance at about $30 million.

The city staff report narrows the field to the three options with the greatest revenue potential — the Transaction and Use Tax, the Real Property Transfer Tax and the Parcel Tax — and frames a fork for the Council. If the Council wants a general tax it can spend flexibly, staff recommends the Transaction and Use Tax, calling it stable, familiar to voters and unlikely to draw significant organized opposition. If the Council prefers to dedicate funding to specific priorities, staff recommends the Parcel Tax.

That choice carries a threshold consequence. A general tax, with revenue flowing to the General Fund for flexible use, needs approval from a simple majority of voters; a special tax dedicated to a stated purpose needs a two-thirds supermajority. A parcel tax is inherently a special tax, requiring the higher threshold.

The report ties the options to the City’s fiscal position. The Council approved its current General Fund budget on June 15, balancing it with one-time revenues and reserves for the third consecutive year, and on June 22 the Finance Committee sought further discussion of a possible November revenue measure. The report describes a widening structural deficit driven by expenditure growth that outpaces revenue growth, while calling the City’s near-term outlook stable. It does not state the size of the deficit.

The Council has identified five funding priorities, four of them funded almost exclusively through the General Fund: modernizing fire department facilities and expanding fire prevention; improving roadways and pedestrian and bicycle safety; investing in year-round shelter and transitional housing; carrying out the Economic Development Strategic Plan; and moving toward a carbon-free future.

On the sales-tax option, the report notes that Pasadena’s compounded rate is currently 10.5% and will rise to 11% in the fall under the county’s Measure ER, with 13 other Los Angeles County cities already above Pasadena. The quarter-cent Transaction and Use Tax would mirror Measure I, the three-quarter-cent tax city voters approved in November 2018. The report states the California Legislature approved Assembly Bill 1768 to let the county exceed the 2% local sales-tax cap for its half-cent measure, preserving room for a local quarter-cent tax.

The Parcel Tax option would follow a 2022 measure in which voters approved continuing the Library Special Parcel Tax, which generates about $2.8 million a year and comes up for renewal before 2038. For fire services and street maintenance, staff modeled a parcel tax at $0.24 per developed square foot, which the report estimates would generate about $30 million a year.

The report also asks the Council to find that the action is not a “project” under the California Environmental Quality Act, meaning no environmental review is required.

The public meeting begins at 6 p.m. Monday in the Council Chamber at Pasadena City Hall, 100 N. Garfield Ave., Room S249. The agenda and live video are posted at cityofpasadena.net/commissions/agendas, and meetings are broadcast on KPAS and the City’s YouTube channel.

If the Council gives direction Monday, staff would return with final ballot language at the July 27 or Aug. 3 meeting — ahead of the County’s Aug. 7 deadline. Any measure the Council places on the ballot would go to voters in November.