As Folsom City Council convenes for its final meeting of the month Tuesday, discussion of a potential sales tax measure will be the highlight of the evening’s agenda. The subject has been brought up in previous discussions as the city looks at budget shortfalls ahead.
According to the meeting agenda packet for the upcoming meeting, City Manager Elaine Andersen is recommending that the City Council provide direction to staff pertaining to a potential local sales tax measure being placed on the November 2024 General Municipal Election for consideration by Folsom voters.
Through various budget, strategic planning, special meetings and workshops, Folsom’s City Manager and Chief Financial Officer have presented City Council with information regarding changes in the historical, predictable pattern of the city’s sales tax revenue rate of growth in comparison to the rising costs, including that of employee compensation and benefits. There has also been much concern regarding the city’s overall reserves compared to that of other jurisdictions.
The concerns include the city’s financial ability to set money aside and respond to long-deferred construction and maintenance needs for the city’s facilities, including parks, trails and infrastructure, staff needs, and more over a five year period ahead.
According to city documents detailing next week’s meeting, in the context of these significant fiscal challenges, the City Manager and the Chief Financial Officer previously discussed the benefits of a potential local sales tax measure with the City Council.
City staff initiated and completed a comprehensive community outreach effort on these subjects in 2022; engagement from the community was rated as remarkably high compared to other jurisdictions by the expert consultants engaged in that effort at the time.
According to the city staff report, staff subsequently presented proposed ballot language for a local sales tax measure to the City Council at its July 12, 2022 regular meeting for consideration for placement on the ballot of the November,2022 General Election. The City Council declined to place the language on the ballot at that time.
Tuesday, the City Manager will provide a briefing on a potential local sales tax measure, including a summary of the City’s fiscal challenges; examples of benefits to the City organization and the community if such a measure were passed; and options and questions for the Council’s consideration and direction.
According to city provided data, Folsom’s cumulative tax rate on retail sales currently stands at the base rate of 7.25 percent of the purchase price, plus an additional .5 percent for Measure A transportation uses, for a total of 7 .75 percent of purchase price. However, the City of Folsom does not receive .75 percent of the purchase price from each sale within Folsom. Instead, that tax revenue is allocated between the State of California, the County of Sacramento, the City of Folsom, and other public agencies. Folsom’s share is 1.0 percent of the purchase price. This means that if someone makes a one dollar purchase in Folsom, the City of Folsom receives one cent (not7.75 cents) from that transaction.
According to the analysis, if voters were to approve a local sales tax measure, 100 percent of the revenue from that measure would go to the City of Folsom; that is to say, the revenue would not be shared with other agencies.
A successful sales tax measure raising Folsom’s rate by one-half percent would increase the cumulative tax rate in Folsom to 8.25Yo, and Folsom’s share of the purchase price would increase from 1.0 percent to 1.5 percent. A successful sales tax measure raising Folsom’s rate by one percent would increase the cumulative tax rate in Folsom to 8.75 percent, and Folsom’s share of the purchase price would increase from 1.0 percent to 2.0 percent.
The data notes that. “traditional estimates show that about 40 percent of sales tax is paid by non-residents.”
In comparison with neighboring communities in Sacramento County, the Cities of Elk Grove (8.75 percent), Galt (9.25 percent), Rancho Cordova (8.75 percent), and Sacramento (8.75 percent) all have at least a one percent local sales tax in place. The City of Citrus Heights remains at 7.75 percent alongside Folsom’
According to the financial impact section of the city staff report, it is estimated that a one-half percent local sales tax would initially generate approximately $11 million per year. A one percent local sales tax would initially generate approximately $22 million per year until and unless repealed by voters.
The sales tax discussion is deep withing Tuesday’s agenda, currently listed as item 13 and the sole topic in new business. The meeting is set to begin at 6:30 p.m. at Folsom City Hall, 50 Natoma Street in Folsom. Those with an interest in the topic are urged to attend.
“Whether you’re for or against the idea, or just want to learn more, I encourage you to attend the meeting to voice your opinion,” noted Folsom City Councilmember Sarah Aquino in her pre-meeting outreach she provides to the community regularly to keep residents informed. Folsom Mayor Rosario Rodriguez also advised several residents to consider attending during the Oct. 10 Folsom City Council meeting.
Those that cannot attend this meeting in person but wish to participate can do so online as well. For information on participating in a city council meeting online CLICK HERE to be taken to the city’s website with instructions on how to do so.
To view the entire agenda and details for the meeting, you can do so by CLICKING HERE.