The City Council has placed a three-quarter-cent local sales-tax proposal on the Nov. 5 ballot — and this past Saturday, Council Member Diana Mahmud held an informational session on the matter.
“We face a significant structural deficit in the budget,” Mahmud said during her presentation before about 50 people at a meeting of Women Involved in South Pasadena Political Activism (WISPPA) at the Senior Center. “This [deficit] is now a million per year, increasing to $2 million by 2025,” she said.
As a city official, Mahmud is precluded from advocating one way or the other on the issue, and she stressed she was just presenting facts on the matter.
If approved, the measure will increase the sales tax paid in the city from 9.5 percent to 10.25 percent, the state maximum.
The increase would raise an additional $1.5 million per year that would stay local, Mahmud said — meaning, no other agency could capture that revenue. Funds could then be used to maintain city services, especially police and fire, and meet increased needs for street and sidewalk repair and city infrastructure maintenance, she said.
The city’s financial problem, which Mahmud said was unanticipated until a number of years ago, is primarily due to rapid increases in what cities are being charged for California Public Employees’ Retirement System pensions. Costs for personnel, services and contractors have also escalated.
In addition, Mahmud said, revenue from some other tax sources has decreased. Property-tax growth is minimal, Utility Users Tax revenues are declining and sales-tax revenue is flat or decreasing. This is according to a five-page “Questions and Answers” document about the proposed Measure A obtained from the city in July 2019.
Residents favored this option to provide stopgap funding for the budget, according to a survey, she said.
“The sales-tax measure was identified … as a preferred revenue enhancement opportunity supported by the community,” according to research undertaken for the city by True North Research, LLC. Its report was included in the agenda packet for the city council meeting of June 19.
In fact, 68 percent of likely voters said they would definitely or probably support the sales tax. A representative of the company reported on the study’s results at the June 19 council meeting.
Another reason for placing the measure on the upcoming election ballot is that other entities may be also be considering asking voters to approve the tax increase for their own purposes, Mahmud said.
“Right now, L.A. County Fire [Department] is running at a deficit,” Mahmud said. “There is discussion at the County Board of Supervisors of placing a sales-tax measure on the ballot.”
If it’s not the county, another agency might be also be considering asking for the increase, she said. “The South Coast Air Quality Management District is still talking about some sort of tax,” she said.
Like 30 other cities in Los Angeles County that have already increased their sales tax, South Pasadena sees how the measure can help resolve its own fiscal crisis, she said.
“If we vote to increase that for ourselves,” Mahmud said, “it stays local, we have control of it and it helps us address our needs.”
She said that last fall Burbank, Glendale and Pasadena all increased their sales tax to the maximum.
The 45-minute presentation, accompanied by PowerPoint slides, was followed by almost 20 questions and comments about the measure and other city issues. Betty Emirhanian, WISPPA president, and Ellen Wood, the group’s vice president, moderated it. Wood is also the city Finance Commission chair.
Several officials, namely resident Charles Trevino of the Upper San Gabriel Valley Municipal Water District Board of Directors, and Janet Braun, city Planning Commission vice chair, raised the issue of developing long-range plans.
“I’d like to hear what is the long-range economic plan for the next five to 10 years so we don’t keep coming back with the ‘dire need’ to have more taxes placed on us,” Trevino said.
Mahmud said that development is a key to financial stability.
“We’re anticipating greater recovery in property tax after these developments are built,” she said.