AAA-Rated Pasadena Uses Fake Fiscal Crises to Tax Its Citizens More

At this point, the municipal authorities in one of California’s most well-to-do cities are operating with open disdain towards its citizens, not even granting them the courtesy of a wink and a nod. The city is AAA rated, and you better believe that cities like Stockton and Oakland have to roll their eyes when they see Pasadena claiming financial distress.

So why does Pasadena claim to be in fiscal crisis, when the reality couldn’t be any more different?

Because they can, and because special interests living within Pasadena city limits will benefit from certain higher taxes being on the ballot. So, the question really becomes: why not?

When Californians passed an amendment to the state Constitution known Proposition 13 in 1978, they voted, among other things, to place a limit on ad valorem property tax rates that would not exceed 1% of the complete cash value of the property. Additionally, in 1996 Californians approved the “Right to Vote on Taxes Act”, also known as Proposition 218. This further limited municipalities’ ability to levy property taxes without the approval of a majority of citizens.

The result was that lawmakers would need the support of two-thirds of voters to raise taxes for a specific local program or project. In addition, taxes could only be proposed ‘during general elections when the city council is also up for a vote.’

But there was a catch which would ultimately diminish some of this perceived voter control over taxation. A loophole in Proposition 218 allows the municipal governing body to ignore the timing restrictions so long as a unanimous vote of a “fiscal emergency” was declared by that same board of governors. Unlike other states, there were no proper guidelines for a city that qualified as being in ‘fiscal distress’. By no accident, California city councils could essentially declare a fiscal emergency based on a whim, or more likely, a desire to get a cut of lucrative business environments.

In the case of cities such as Pasadena, true fiscal emergencies are a figment of the imagination. Wealthy residents willing to pay already-exorbitant taxes keep the city’s coffers full, but full coffers have never satisfied the ambitions of certain special interests nor the insatiably tax-happy public servants of California. Annnd the loophole is there, so why not take advantage of it?

Even if claims of financial strain are nothing short of a bold-faced lie, there have proven no checks to stop municipalities like Pasadena from using the fiscal emergency loophole to get new taxes on the ballot. Pasadena is not alone in its exploitation of a loophole as a means to bring in more tax revenue from citizens of a state with some of the worst homeless crises resulting from unsustainable costs of living.

‘In the last decade, more than 50 California cities have declared fiscal emergencies. Many are questionable and look to be excuses for new taxes. Recent examples include Moraga, which had a AA+ rating at the time, and Santa Cruz, which has declared a series of fiscal emergencies even as its bond ratings improved.’ (Wall Street Journal)

But Pasadena is an interesting case because it illustrates how cities will act strategically to outpace those who would oppose new taxes, in this case a fee on business selling recently-legalized recreational marijuana. By calling a premature vote on a tax and flooding constituents with promises of how such taxes will benefit them directly, municipalities have a better shot at claiming a cut of legal marijuana sales for themselves. Sure enough, a 9.5% city sales tax on the sale of legal marijuana was passed last month, with voters precluded from hearing the pro-business side of why such a tax may ultimately lead them to pay more in the long-run.

While voters still technically have the choice as to which way to vote, never underestimate the power of government-sanctioned propaganda campaigns, especially upon a constituency as perpetually under-informed as Californians. The added advantage that the Prop. 218 loophole confers upon governments who strategically outmaneuver their would-be opponents, who can be caught off guard and unprepared to effectively wage an opposition information campaign, is nothing if not un-Democratic.

And, as the Pasadena city council has continued to illustrate, they won’t stop with this tax. As they say, give the Pasadena city council a 9.5% sales tax on recreational marijuana sales, and next thing you know they’ll be pushing for a mile – or, more specifically, a 10.5% tax, which will be on the books during the November election cycle.

Californians have never been ones to read the fine print; there are waves to be surfed and joints to be smoked. But, to permit the passage of a Proposition with such a gaping loophole was derelict even by Californian standards. And, the citizens will continue to pay the price, with municipal governments outwitting them with conveniently timed tax hikes that will ultimately raise the cost of doing business and living in the state.

Call California government what you will, but don’t accuse them of being incompetent when it comes to finding clever ways to siphon ever-increasing portions of money from its people. Perhaps, eventually, the people of California will catch on to the “fiscal emergency” rouse, rejecting taxes that arise during these phony declarations based on principle alone.

But even that could prove a danger to the people of the Tax-Happy State, because, what happens when a city truly falls into fiscal crisis, but the people are so numb to the old charade that they refuse to believe new taxes are necessary?

Who are we kidding? They’re going to pay the taxes every time, because that’s what they tend to do on the majority of the Left Coast. They’ve made shooting themselves in the foot an art form, and their leaders are more than happy to oblige and encourage their tendencies toward self-impoverishment.

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