Pasadena Confronts ‘Most Challenging Budget in Years’ Amid Revenue Shifts, Modest Surplus

Facing declining sales tax revenues and flat property tax growth, Pasadena city officials on Monday unveiled what they called the most challenging budget in recent memory—one shaped by economic uncertainty and a patchwork of shifting revenue projections.

“It’s clear that we don’t have enough resources to meet the needs that we have,” said City Manager Miguel Márquez. “We’re not funded based on need, we’re funded based on formulas. But I do think it’s important to baseline and recognize that we’re proposing no layoffs, we’re proposing no hiring freeze. And in these difficult circumstances that says something about the prudent fiscal management the Council has authorized and that the staff has implemented.”

Originally, the city projected a general fund shortfall of more than $5 million. However, the proposed budget now reflects a modest surplus of $1.34 million.

“We’ve had recessions that were easier to navigate—at least then, you could see the writing on the wall,” Pasadena Finance Director Matthew Hawkesworth told the Council. “This budget has changed week to week.”

Officials also identified one-time revenue opportunities, including an additional $10.6 million this fiscal year from applying the full guaranteed fund transfer from the Light and Power fund. That money could be used for priority needs such as outfitting the new fire battalion chief’s vehicle and updating parks equipment to greener alternatives like electric lawnmowers.

City staff also noted that Housing Department funds once earmarked for the Municipal Assistance, Solutions, and Hiring program are now being re-evaluated due to MASH’s limited capacity to fulfill Community Development Block Grant–funded home repairs.

According to Hawkesworth, the city plans to use limited one-time general fund dollars to support public health programs, housing initiatives, public safety, and capital investments, while continuing to evaluate sustainable funding paths for ongoing needs.

On the expense side, rising salary and pension costs added approximately $2.35 million to the general fund budget, compounded by a lower number of vacant positions than in prior years.

Notable expenditures include a $1.8 million increase in fleet fund allocations, primarily benefiting police, fire, parks, and public works, $303,000 to sustain the city’s firefighter “port teams” after grant funding expired, $167,000 to support a new battalion chief for a partial year.

“We have to have bigger discussions about fire and how we become a fire-ready Pasadena,” Márquez said. “And I’ve asked the fire chief to look at that.”

Also, $52,000 for forestry and graffiti-related safety equipment, and $25,000 in increased legal costs to support the newly contracted Independent Police Auditor.

Pasadena’s Public Health Department is also requesting general fund support for a mandated part-time health officer position, while Public Works seeks to add three full-time roles, including a code enforcement officer to address illegal vending at special events.

Despite the modest surplus, Hawkesworth emphasized that the city’s $363 million general fund budget is essentially flat, calling the $120,705 bottom-line surplus a “rounding error.”

The proposed budget is a sweeping $1.5 billion financial plan that outlines spending priorities for every city department, as well as major capital projects and affiliated agencies.

The hearing marks the beginning of the annual review process that will continue through June 9, when the Council is expected to adopt the final budget.

The budget includes $943.6 million in operating appropriations for city departments and an additional $109.7 million allocated to the city’s three affiliated agencies: the Pasadena Center Operating Company, the Pasadena Community Access Corporation, and the Rose Bowl Operating Company. Together, these bring the city’s total operating appropriations to roughly $1.05 billion.

The proposed budget also continues support for core public services while making strategic investments in technology, infrastructure resilience, housing services, and climate-related priorities. The spending plan reflects the city’s mission to deliver exemplary municipal services, consistent with Pasadena’s history, culture, and values.

The City plans to set aside $446.1 million for capital improvement projects, pushing the total citywide appropriation figure to $1.499 billion—the largest in Pasadena’s history.

The capital investment component of the budget is headlined by major allocations to infrastructure.

The Water and Power Department is slated to receive $230.4 million for system upgrades and maintenance, the Public Works Department is budgeted $37.5 million for streets and facilities, and the Transportation Department will receive $28.5 million to continue its efforts to improve mobility and traffic safety.

The Rose Bowl Operating Company is also scheduled to receive $12.8 million in capital appropriations to maintain and enhance one of the city’s most iconic facilities.

Among departmental operating appropriations, Water and Power again leads with $361.5 million in funding, reflecting both its operational scope and capital responsibilities.

The Police Department is allocated $121.4 million, Public Works is budgeted $95.8 million, and the Fire Department will receive $77 million.

The Housing Department is recommended to receive $48.8 million, a notable increase from prior years, and Parks, Recreation and Community Services is budgeted at $29.8 million.

The public hearing will remain open at each regular Council meeting until its expected closure and formal budget adoption on June 9. In the weeks ahead, each department and affiliated agency will present its individual spending plan to the appropriate City Council committees. The first of these departmental workshops is scheduled for Tuesday, May 6.