What’s Been Done To Prevent This (and is a sales tax the only option)?

A sales tax is a measure of last resort, and reflects the fact that the city has a revenue problem, not a spending problem. For the past 17 years straight, independent financial audits show the city has been responsible with our public funds, and the Government Finance Officers Association has even recognized Folsom for its budget process.

Since the Great Recession in 2008 the city has been working to close the budget gap as expenses have increased. Generally the increases haven’t been too noticeable, but we’ve reached a critical decision point. Now, as expenses start to surpass revenues, we have to make some tough decisions.

Like any organization, the city’s biggest “cost” is for employees. To help keep staffing cost down over the past 10 years, the city has:

Reduced staffing levels. The city has 77 fewer employees today than it did in 2008– there are staffing shortages in nearly every department, and all departments are doing more with less, even as our population has continued to increase.
Used part-time or contract employees whenever feasible
Increased employees’ contributions towards retirement
Eliminated retiree health benefits for new employees
Increased employees’ contributions to health benefits
Restructured education incentive pay for costs savings
Extended the number of steps in pay ranges to have smaller annual pay increases
Eliminated longevity pay for new employees
Capped accrued leaves balances and cash out amounts

Today the city of Folsom has 77 fewer employees – including fewer police officers – than it had in 2008, while the city’s population has gone up by more than 13,000 residents. That’s a 13% decrease in staffing, yet an 18% increase in population.

Other steps the city has taken include:

Deferring millions of dollars of maintenance and capital costs
Extended the “useful life cycle” of city vehicles
Implementing electronic permitting and payment system to increase efficiencies
Applying for state and federal grants for capital and service needs

Without a new source of revenue, the city will have to make some tough choices on public services, amenities, and job cuts – at a time when there are already staffing shortages in nearly every department, and as population, expenses and community expectations are on the rise.

For residents, the ability to keep good employees on the job has an impact on the city services you rightfully expect, and on the quality of life you enjoy.

Prior to this measure, other options were explored:

Economic development: To meet the city’s revenue needs, we’d need to build a second location for every one of our top 25 tax revenue-generating businesses (Walmart, Sams, Target, Costco, etc.), and then double the number of customers currently shopping at these stores, which is simply unrealistic. Economic development can help, but it doesn’t get us there alone. (Source: Muni Services / Avenu Insights & Analytics)
Increase the property tax: The city’s revenue from property taxes on a $900,000 home is only $1800 (Source: City of Folsom Department of Finance). Laws like Proposition 13 place limits on what can be done here, and it’s not fair for property owners alone to pay for services that all city residents and visitors enjoy. To that point, another key benefit of a sales tax is that up to 40% of the revenue generated would come from visitors outside the city.
Increase the Transient Occupancy Tax (TOT): The TOT is paid by visitors on their hotel bills. Increasing the TOT would require voter approval, but even if we doubled the current TOT, that would only bring in an extra $2-2.5 million annually, (Source: City of Folsom Department of Finance) not enough to provide for future, long-term needs.

With these options all coming up short, and with the community’s preference to maintain and improve service levels rather than cut them, increasing the sales tax presents the only realistic and reasonable option.