Sales Tax Hike: Not Good For Pasadena
The Pasadena City Council placed Measure I, a proposed 0.75 cent sales-tax increase, on the November ballot as a general revenue measure so that it could be passed with only a majority vote, rather than the two-thirds required for specific expenditure propositions. The claim is that funds will be used to repair sidewalks, rebuild firehouses and more. Of course, the reality is different. Any money collected would go into the General Fund to be programmed however the City Council chooses.
The fact remains that the amount of money that will accumulate under Measure I almost perfectly corresponds with the city’s unfunded pension liabilities that have accumulated over the years as public employee contracts have included higher pay and fatter benefits. (Full disclosure, I served on the Pasadena City Council from 1995 to 2007 and did vote to increase public employee pay and benefits. However, this was when the pension system was “super-funded” and the city’s liabilities were minimal. After the crash of 2002 and again in 2008, the pension system became significantly underfunded.) So, the question for voters really should be, do you want to pay more for goods and services to fund public employee pensions, or would you like Pasadena to live within its means and fund the pensions with existing funds? If, as the mayor and council claim, Pasadena will use the funds to enhance services, how will they deal with the projected budget deficit of up to $20 million forecast for 2021?
Though claims are being made that Pasadena workers and visitors will pay the sales tax increase, it is Pasadena residents who will pay the bulk of the increase. Are you aware that taxes in big ticket items such as automobiles, furniture and appliances are based on the city in which you live, not where you make the purchase? Again, the fact is that, regardless of where you buy that Prius, Pasadena residents will pay the additional 0.75 cent sales tax. Residents from less taxed cities will pay less, even if they purchase in Pasadena.
Who will be hardest hit by the sales tax increase? Those Pasadena residents least able to pay. Sales taxes are among the most regressive taxes imposed, meaning these levies impact lower income residents much more than higher income people. So in a city that proclaims its desire to create more affordable housing for low-income residents, the sales-tax increase will make it more difficult for those struggling to pay the rent and put groceries on the table.
As for Pasadena businesses? Regardless of how sales taxes are collected, Pasadena will be seen as an even more expensive place to shop and dine. As retailers and restaurateurs will tell you, perception is everything and in a city already seen as more expensive then our neighbors, will fewer people support Pasadena retailers and restaurants? If so, how will that impact our economy, employment base and sales tax revenue to the City?
The biggest reality is that there has been no significant, meaningful or reasoned attempt to curtail expenses before asking Pasadena residents to balance the city budget. Where is the look at restructuring government? Are there services provided that could be done more efficiently if done differently? Could technology be better utilized to economize? Are there positions in the city that are redundant or unnecessary? Why hasn’t the City of Pasadena offered a golden handshake to senior employees so they retire and younger, less expensive employees can be hired in their place? Measure I will not enhance services or provide additional infrastructure investments in the City of Pasadena. It will maintain the status quo, pure and simple.
Author: Paul Little
Source: San Gabriel Valley Tribune