1. City Council Item 11 March 5, 2018
Proposed Fiscal Strategy to Maintain Quality City Services & Address Aging Infrastructure needs
City Council Item 11
March 5, 2018

2. Current fiscal position
Expenses exceeding revenues
Return to structural deficits
Dipping into reserves to meet operating costs or reducing services to meet available resources
Aging infrastructure
Growing backlog of needs
More expensive as time goes by

3. Current and projected fiscal trends

4. Actual or budget – the trend is the same

5. Actual or budget – the trend is the same

6. Aging Infrastructure – Growing needs
Sidewalks - 822,000 square feet of damaged sidewalks – estimated cost $12+ million
Police and Fire Departments emergency 911 radios – estimated replacement cost $8 million
Most fire stations don’t meet current operational needs
Public Works Building in need of seismic upgrade
Future Unfunded CIP projects total $285 million

7. Aging and deteriorating Infrastructure

8. Damaged sidewalks and streets

9. Fiscal Responsibility
The City has not been complacent
$19 million ongoing reductions
Elimination of 123 FTEs
Pension reform: shift of $5 million pension costs to employees
Fiscal Year 2019 Operating Budget
Need to close $3.5 million gap
General Fund Hiring freeze for non-critical positions
Elimination of unfilled positions

10. Fiscal Responsibility
Just getting by…
Does nothing to address capital needs
Puts the City in annual cut-mode
Does not allow for additional services to meet new needs e.g., Homelessness
Undermines our ability to pay competitive salaries to attract and retain talent

11. Consideration of asking voters
Do they want to maintain quality City services
Emergency 911 medical response
Police
Youth afterschool and recreation programs
Do they want to address aging infrastructure
Reinvest in public assets
Maintain and enhance facilities
Do they want to support local Public Schools
Separate non-binding advisory vote

12. Options to enhance revenues
For Capital projects only
General Obligation Bond – 2/3rds majority required
For either Operating or Capital
General Tax – 50% +1; Special Tax – 2/3rds majority
Parcel Tax – 2/3rds majority required
Real Property Transfer Tax
Parking Tax
Transient Occupancy Tax
Business License Gross Receipts
Utility Users Tax
Excise Tax
Assessment District
Payment in Lieu of Taxes (PILOT)
Transaction (Sales) Tax

13. Transaction (Sales) Tax is best option
Benefits
Large tax base
Paid by all shoppers not just Pasadena residents
Generate significant additional revenues with small incremental increase in transaction costs - 75 cents for every $100

14. Year Approved by Voters
LA County Tax Rates
City
Local Tax %
Year Approved by Voters
Commerce
0.5
2012
Compton
1.0
2016
Culver City
Downey
El Monte
2008, 2013, 2017
Inglewood
2006
La Mirada
Long Beach
Lynwood
Pico Rivera
2008
San Fernando
2013
Santa Monica
2010, 2016
South El Monte
2010
Southgate

15. Why act now Planning for FY 19 operating and capital budgets
How deep and how structural do next year’s reductions need to be
What capital projects can we consider undertaking
Opportunity to go to the voters may pass us by
Should the County proceed with a sales tax measure
Should Business Roundtable Initiative be approved
Substantial work is needed
To prepare educational materials and craft the ballot materials

16. PUSD Advisory Vote Separate non-binding vote
Similar approach as to Santa Monica
Maintains measure as a General Revenue 50%+1
Strong public schools are recognized part of Economic Development Strategic Plan
Funds would stay local
Based on need staff recommends proceeding with proposed ¾ cent measure
regardless of whether PUSD is included of fails to garner 50%+1 support

17. Recommendation
That Council endorse the proposed fiscal strategy to maintain quality City service levels and address aging infrastructure needs and direct staff to return to Council as appropriate to place a revenue measure and a separate advisory vote on the November 2018 ballot

19. Recent One-time revenues
Fiscal Year(s)
Description
Amount
2016
Unwinding of sales tax triple flip
$      2,000,000
Property tax administrative fee lawsuit proceeds
$      1,100,000
2016, 2017, 2018
Successor Agency repayment of PCDC loans from General Fund (total amount)
$    11,100,000
2015, 2016, 2017, 2018
Successor Agency repayment of Transportation Debt (annual amount)
$      1,900,000
GF Reimbursement of embezzlement insurance settlement
$          395,000
2017
Direct Use Tax payment for GT5 Turbine
$          500,000
SB481 lawsuit proceeds
$      9,000,000

20. Current and projected fiscal trends

21. Current fiscal position
Fiscal Year 2018 General Fund Operating Budget – excludes debt service and transfer to PCOC

22. Current fiscal position
Fund Balance

23. Current and projected fiscal trends
Department of Finance

24. Current and projected fiscal trends

25. Reduction History – General Fund