Pasadena’s Sales Tax Growth in Third Quarter Tempered by One-Time Payments, Official Says

The City of Pasadena announced that its sales tax receipts for the third quarter totaled $10,692,624, a robust 5.3% increase over the same period last year. That figure starkly outperforms a flat Los Angeles County and a modestly growing state of California (+1.9%). However, city officials have been quick to add critical context to the impressive number, revealing that the increase was largely driven by one-time payments that are not indicative of ongoing economic activity. 

In a statement published in the Pasadena City Manager’s newsletter, Pasadena Director of Finance Karin Schnaider clarified that while the top-line number appears strong, the city’s underlying sales tax revenue is expected to remain “relatively flat” for the current fiscal year. The significant boost in the third quarter came from one-time payments in the “business and industry” category and related growth in the countywide use tax pool. 

This official clarification reframes the narrative from a dramatic economic rebound to a more sober picture of steady, but modest, underlying growth. 

A More Nuanced Picture of Growth 

The city’s third quarter report shows gross receipts were up 11% before adjustments for audit corrections and late payments brought the final figure to 5.3%. While this adjusted number is still strong, the context provided by the Finance Director is crucial for a proper understanding of the city’s fiscal health. 

The largest driver was the Business and Industry sector, which skyrocketed 70.7% due to a large, one-time taxpayer payment. 

“Categorically, business and industry, general consumer goods, and the county pool allocation attributed to over 70% of the quarter’s increase,” Schnaider stated.

General consumer goods, the city’s largest sales tax category, jumped 4.2%, while the city’s allocation from the countywide use tax pool surged 10.7%. 

“This was mitigated by a continued decline in auto and transportation, fuel, and food categories. Additionally, the business and industry, as well as the related growth in the county pool allocation, are considered one-time payments.” 

This means that without these one-off revenues, the quarter’s performance would have been significantly less robust. The city’s official forecast reflects this reality. On an ongoing basis, the Bradley-Burns Sales Tax is expected to remain relatively flat this fiscal year, with an anticipated moderate 1.2% increase next year. This is a far more cautious outlook than the headline 5.3% figure would suggest. 

Sector Deep Dive: A Story of Divergence 

A closer look at the data reveals a city economy pulling in different directions. While some sectors showed remarkable strength, others continued to struggle. 

Strong Performers: 

• Business & Industry: The 70.7% surge, while a one-time event, was the quarter’s largest gain. 
• Home Furnishings: This sector jumped 19.3%, dramatically outpacing the County (+6.6%) and state (+1.7%). 
• Family Apparel: Showed impressive strength with a 13.2% increase, well ahead of the County (+2.8%) and state (+2.9%).
• Building & Construction: Boosted by an 11% rise in building materials and a 12.1% increase in plumbing/electrical supplies, this sector continues to be a bright spot, likely fueled by fire recovery efforts. 

Weak Performers: 

• Autos & Transportation: This broad category saw a 7% drop. The decline was led by New Motor Vehicle Dealers, who were down 9.1% for the quarter, a stark contrast to the modest 0.9% gain seen by dealers in the rest of the County and state. 
• Fuel & Service Stations: Revenues fell 5.6%, marking the 10th negative quarter out of the last 11 for this sector, as low crude oil prices and reduced refinery capacity continue to impact results. 
• Food & Dining: Both Casual Dining (-0.8%) and Quick-Service Restaurants (-5.0%) saw declines. 

Comparison with Regional Peers 

Even with the caveat of one-time payments, Pasadena’s performance for the quarter stands in sharp contrast to its neighbors. The city’s ability to capture these significant one-time revenues still points to a dynamic local economy.

Meanwhile, the City of Glendale continues to grapple with a projected $34 million General Fund deficit for Fiscal Year 2025-26, a problem largely fueled by a 5.5% decline in its sales tax revenue in the second quarter. Glendale’s heavy reliance on its auto dealerships has left its budget exposed. Pasadena’s more diversified retail base, while not booming with organic growth, appears more resilient. 

Measure I Shows Similar Trends 

Pasadena’s voter-approved Measure I, a local transactions and use tax, reflected a similar pattern. The measure saw a 5% increase in revenue for the quarter, bringing in a total of $8,214,438. However, Director Schnaider noted that its growth is “trending similar to the Bradley Burns Sales Tax and holding flat in auto and transportation categories.” 

As with the base sales tax, the city’s forecast for Measure I is tempered. On an ongoing basis, the tax is expected to remain relatively flat this fiscal year, with an anticipated moderate 1.9% increase next year. This stable local revenue source remains critical for funding essential city services, even if explosive growth is not anticipated. 

Looking Ahead: A Cautiously Optimistic Outlook 

The official context from the City of Pasadena paints a picture of cautious optimism. The city is not experiencing the kind of runaway economic boom that the 5.3% headline number might imply. Instead, it is seeing modest, steady underlying growth, supplemented by occasional one-time revenue events. This stability, however, is a significant strength in the current economic climate, especially when compared to the fiscal struggles of neighboring cities. 

The challenges in the auto, fuel, and food sectors are real and ongoing. However, Pasadena’s diversified economy, with strengths in construction, consumer goods, and  e-commerce-related pool allocations, provides a solid foundation. The city’s ability to weather declines in some areas while capturing growth in others is a testament to its economic resilience.