Pasadena leaders are considering asking voters to approve up to five new taxes as officials warn of a growing budget problem that they say could threaten funding for essential services.
The city council is expected to vote Monday night on which tax proposals should move forward for the Nov. 3 municipal election, Pasadena Now reported.
The meeting is not about approving any taxes outright. Instead, council members who represent nearly 140,000 residents, will decide which measures, if any, should be drafted for the ballot, where voters would have the final say.
City officials say the proposals are needed because Pasadena is facing what they describe as a “widening structural deficit” — a situation where spending is rising faster than revenue.
The city has relied on one-time funding and reserve money to balance its General Fund budget for the past three years, the local outlet reported.
The city’s current fiscal year budget includes roughly $379.7 million in General Fund revenue compared with about $383.4 million in planned spending, leaving a gap of around $3.8 million that officials say was covered using $5 million in one-time funds.
The imbalance is expected to worsen over time, with revenue projected to grow by about 3% to 4% annually while expenses are forecast to increase between 4% and 6%.
Although Pasadena continues to adopt balanced budgets and maintains strong bond ratings, city officials argue that existing revenues are not enough to fully fund priorities including fire station upgrades, wildfire prevention, road repairs, pedestrian and bicycle improvements, homelessness programs and economic development initiatives.
To address the shortfall, staff presented five possible tax measures that together could generate between roughly $5 million and $30 million annually.
- One proposal would add a quarter-cent local sales tax, bringing in an estimated $11 million each year. Pasadena’s sales tax rate currently stands at 10.5% and is already scheduled to increase to 11% later this year because of Los Angeles County’s voter-approved Measure ER. If city voters also approve the local increase, Pasadena would use its remaining local sales tax capacity.
- Another proposal would create a parcel tax dedicated to fire protection and road improvements. Under the higher option, property owners would pay about 24 cents per developed square foot, generating an estimated $30 million annually. For the median 1,600-square-foot home, that would amount to roughly $384 per year. A lower version would raise about $20 million annually for fire-related projects only.
- The council is also considering a real property transfer tax on property sales that officials estimate could raise as much as $26 million each year. However, city staff cautioned that the revenue would likely fluctuate significantly with the housing market and warned the proposal could face organized opposition.
- A fourth option would introduce a new 10% tax on parking transactions, similar to Pasadena’s hotel occupancy tax. Officials estimate it would generate about $5 million annually.
- The final proposal would overhaul the city’s business tax system by replacing its decades-old employee-based structure with a gross receipts model used by other California cities. Staff estimate the change could generate an additional $10 million to $15 million annually, though they said the proposal would likely require more public outreach and may not be ready in time for this year’s ballot.
City staff said they favor pursuing the quarter-cent sales tax because it would provide a stable source of general revenue and is similar to measures previously approved by local voters.
For funding dedicated projects, staff recommended the parcel tax, saying taxes tied to specific public services such as fire protection and infrastructure improvements have historically received stronger public support.
Officials were more cautious about the proposed property transfer tax, describing it as “volatile” and warning it could have “unintended effects” on both residential and commercial real estate markets.
Under California law, general taxes require approval by a simple majority of voters, while special taxes earmarked for specific purposes must receive support from at least two-thirds of voters.
If council members direct staff to move ahead Monday, final ballot language is expected to return later this month before Los Angeles County’s Aug. 7 filing deadline. Any measures approved by the council would then appear before Pasadena voters in the Nov. 3 election.
