Office of the City Manager
REVIEW OF CITY REVENUE SOURCES AND
OPTIONS FOR REVENUE ENHANCEMENTS FOR
THE GENERAL FUND
Finance Committee and City Council Meeting
July 13, 2026
Background
• On June 15, 2026, the City Council approved
a balanced General Fund budget using one-
time revenues and reserves.
• Balancing the budget has become
increasingly difficult due to:
> Economic uncertainty
> Persistent inflation
> Stagnate/slow revenue growth
2 Background
• Dependent on one-time revenues and
reserves for three consecutive fiscal
years.
> A widening structural deficit continues
> The City Council has identified five City
funding priorities
Four rely primarily on the General Fund
Current funding is insufficient for ongoing
services
3 Local Funding Options – Tax
Local Tax Opportunities Estimated Additional
Annual Revenue
Transaction and Use
Tax (0.25%) $11M
Tax on Parking
Occupancy $5M
Real Property
Transfer Tax $26M
Business Tax $15M
Parcel Tax $30M
4 Transaction and Use Tax
• Current capacity of ¼ cent - $11M
annually
> Has voter familiarity and ease of administration
• General or Special Tax
> As a general tax, similar to 2018-Mearsure I, majority voter approval needed
> As Special Tax could fund a City priority, 2/3 voter
approval needed
May gain supporters with dedicated spending plan
5 Tax on Parking Occupancy
• Revenue estimate, $5M
> New taxing structure, varies across cities
> Administration
Structure likely mimic Transient Occupancy Tax,
New tax for parking facility operators
• General or Special Tax
> May have opposition from special interest group(s)
> As Special Tax could associate with a City priority,
2/3 voter approval needed
May gain supporters with dedicated spending plan
6 Real Property Transfer Tax
• Revenue estimate, $26M
> Tax structure could have single or tiered rates
> Administration
Administered through LA County
• General or Special Tax
> May have opposition from special interest group(s)
> As Special Tax could associate with a City priority,
2/3 voter approval needed
May gain supporters with dedicated spending plan
7 Business License Tax
• Revenue estimate, $15M
> Tax structure varies across cities
Could have single or tiered rates
Needs outreach with business community
> Administration
New administration procedures, likely streamlined
• General or Special Tax
> May have opposition from special interest group(s)
> As Special Tax could associate with a City priority,
2/3 voter approval needed
May gain supporters with dedicated spending plan
8 Parcel Tax
• Revenue estimate, $30M
> Tax structure varies
> Administration
New administration procedures, mimic Library Tax
• Special Tax
> May have opposition from special interest group(s)
> As Special Tax could associate with a City priority,
2/3 voter approval needed
May gain supporters with dedicated spending plan
9 Dedicated Services
• Fire Plan
> Modernize fire department facilities & Enhanced
Fire Prevention
Training center; Facility upgrades; Long term capital planning
Brush clearance, Paramedic services, Fire response
• Roadway
> Improve roadways & implement pedestrian/bike
safety strategies
Pavement condition, Enforcement, Pedestrian/bike safety 10 High-Potential Revenue Options
• High-Potential Revenue Options:
> Real Property Transfer Tax
> Transactions and Use Tax (TUT)
> Parcel Tax
• Considerations for Real Property Transfer Tax:
> Generates high revenue but volatile revenue
source
> Most cities with this tax originated as pre-Prop 13
> May face strong outside opposition and can
create unintended market impacts.
Likely to be gain support as a dedicated tax but would require 2/3 voter approval.11
Recommended
• General Tax:
> TUT provides stable revenue, is familiar to voters,
and is unlikely to attract significant opposition.
• Dedicated Tax:
> Parcel Tax offers reliable funding for specific
services or infrastructure and often receives strong
community support;
> Requires two-thirds voter approval.
12 Considerations for Tax
• All options are still preliminary
> Staff needs Council direction on which measure(s) to
advance.
> County deadline for ballot materials is August 7, 2026. > Council must approve final documents on July 27 or
August 3.
Currently these dates are not scheduled.
> Staff recommends forming an Ad Hoc Committee to
finalize ballot language.
13 QUESTIONS?
14 Parcel Tax Modeling
on Residential
Models
Rate per
sq ft
Revenue
Estimate
Tax Median
Residential
(1600 sq ft)
Tax Average
Residential
(1730 sq ft)
Alternative 1 $0.15 $17, 489,859 $240.60 $259.50
Alternative 2 $0.20 $23,251,813 $320.80 $346.00
Alternative 3 $0.30 $34,877,719 $481.20 $519.00
Parcel Tax Modeling on
Residential and Non-Residential
Taxable Land
Use
Rate Per
Sq Feet Square Feet
Revenue
Generation
% of
Revenue
Residential 0.24 77,359,933 $18,566,383.92 67%
Non-Residential 0.24 38,899,130 9,335,791.20 33%
116,259,063 $27,902,175.12
16 At $0.24 per square foot a property owner would
pay approximately $240 per 1000 square foot of
developed property.
Recommend an inflation component to the tax to meet
demands over time.
Real Property Transfer Tax
• Transfer taxes may be adopted by charter
cities, and the typical rate staff identified is
between .22% to .33%.
• City of Los Angeles and Santa Monica’s
“mansion” tax were citizen initiatives, and the
funds were directed primarily to fund
affordable housing efforts.
17 Pasadena’s 10.5% Sales & Use Tax:
Component Rate
State Base Sales Tax 6.00%
County Tax (Los Angeles) 0.25%
City Tax (Bradley Burns) 1.00%
District Taxes (Total) 3.25%
* Measure R (Transpt.), sunset 2039 0.50%
* Measure M (Transpt., roads, transit) 0.50%
* Measure A (Homeless Services, replaced Measure H
0.25%) 0.50%
* Prop A (transit) 0.50%
* Prop C (transit) 0.50%
* Pasadena (Measure I) 0.75%
18 Common Exemptions
for Parking Tax
• Deposits of coin(s) into city owned and
operated parking meters
• Residential and hotel parking in excess of 30
consecutive days
• If cost of parking is included in hotel bill and
not taxed separately (to avoid stacking TOT
and TPO)
19