Council Considers Sales Tax Measure

A proposal to put a ¾-cent sales tax increase on the November 2019 ballot was before the South Pasadena City Council on Wednesday, June 19.

The measure came after a polling company hired by the city released the results of a poll that showed 68 percent of those responding supported a sales tax increase as a way of closing a budget deficit that could grow in coming years.

“South Pasadena does not currently have our own local sales tax,” said City Manager Stephanie DeWolfe. “This measure would generate local revenue that would be put to work directly in our city, maintaining the quality of life and customer service that our residents value.”

Currently, buyers in South Pasadena pay state and county sales taxes for a combined rate of 9.5 percent but no local sales tax.

As part of Wednesday’s meeting, the council was scheduled to hear the results of the community opinion survey that was performed by True North Research which included the sales tax findings.

The proposed ¾-cent tax increase would raise about $1.5 million per year in local revenue, enough to close the budget gap for the next several years, according to staff reports.

The budget deficit is due to infrastructure expenses, personnel costs and increases in pension obligations.

As part of the proposal to put the sales tax increase on the ballot during a special municipal election Nov. 5, 2019, the city would legally need to declare a fiscal emergency, according to City of South Pasadena Public Information Officer John Pope.

Similar sales tax measures have been adopted, or are being proposed, by several cities in the San Gabriel Valley, according to a city staff report.

In other related business before the council was adoption of a long-term financial sustainability strategy which had already gone before the Finance Commission which recommended the council approve the plan.

The city developed the strategy because of increasing expenses and flat or declining revenues making current city services unsustainable. It was determined that cuts in expenses would not be sustainable without increases in revenue, according to a staff report.

The report said that in addition to a local sales tax, several revenue enhancements have scored high throughout the community in recent months including redevelopment of city properties, the building of a small hotel and the implementation of a hotel tax.

A five-year forecast shows that the city will have a budget shortfall of more than $1 million in FY 2019-2020 increasing to almost $2 million in five years, according to staff reports. These estimates do not include the results of pending labor negotiations and any additional CalPERS pension expenses.

The city on June 5 passed a $28.3 million FY 2019-2020 general fund budget.

Also before the council on Wednesday was approval of a contract with Circlepoint for communications and community relations services on housing-related matters. The contract, not to exceed $29,500 would be paid fully by county Measure H Homeless Initiative grant funds.

If the contract is approved, Circlepoint will as part of its job coordinate three community meetings beginning in September on four housing-related issues, according to Pope. These issues are: Alternative Dwelling units such as so-called “Granny Flats” on existing property; Affordable Housing; Renter Relocation Fees to be paid by landlords and institution of a Rental Property Inspection Program.