Folsom’s City Council will consider the proposed Fiscal Year 2025–26 budget at its next public meeting on Tuesday, June 24, at 6:30 p.m. in the Council Chambers at City Hall, 50 Natoma Street. The presentation follows the initial budget overview delivered by the City Manager during the June 10 council meeting. The session will also be streamed live online, and residents are encouraged to attend and share their input.
The proposed budget outlines the city’s priorities and financial realities for the upcoming fiscal year, which begins July 1. It reflects a $3.5 million structural gap in the General Fund, which supports essential services including police, fire, parks, trails, street maintenance, and other city operations. General Fund revenues are projected at $119.9 million, while expenses are forecast at $123.5 million.
To close the gap, the City Manager recommends using one-time emergency reserves. This would mark the first use of reserves outside of a recession in two decades and would reduce the reserve balance to 15% of expenditures, below the council’s adopted policy of maintaining 17% to 20%.
No new General Fund positions are proposed in this budget, and department appropriations remain flat. Fifty percent of General Fund spending will support public safety operations. Ten new positions are proposed, but they will be funded by enterprise accounts such as water, wastewater, and solid waste, which remain financially stable with significant working capital reserves.
Capital projects remain a priority, with major outlays proposed for infrastructure, park improvements, and public safety equipment upgrades. These include $1.3 million for replacing the library roof, $1.8 million for HVAC system upgrades, and $756,000 for new fire department EKG monitors.
The city operates more than 150 separate funds, but the General Fund is the only discretionary fund under direct council control. This year’s proposed budget is presented in a new format designed to enhance transparency and separate capital from operating expenditures, requiring significant manual effort from the finance team.
Overall, General Fund revenues are projected to grow by $4.7 million (4%), driven largely by increased property taxes tied to development in the Folsom Plan Area. That area now generates 24% of the city’s total property tax revenue, up from just 2% eight years ago. Despite population growth, sales tax revenue has remained flat, reducing per capita contributions.
Personnel and insurance cost increases total $5.5 million, with another $3 million in budget “true-ups” to align funding with actual expenses. While the budget for the upcoming year is technically balanced through the use of reserves, city leaders caution that continued deficit spending is not sustainable.
If left unaddressed, the city could face an ongoing shortfall of $6 million annually by FY 2030–31. Rising pension obligations through CalPERS are also a growing long-term concern. Projections show that emergency reserves could fall below minimum policy thresholds within five years if structural changes are not made.
In response, the City Council will begin formal discussions this fall to explore cost-saving measures and potential revenue solutions, including the possibility of a sales tax increase. Public participation will be central to those decisions, and the city is emphasizing transparency and community engagement throughout the process.
A preliminary budget is expected to be adopted in June, with a final adoption scheduled for September or October following fiscal year closeouts. A mid-year review will take place in February or March 2026 to allow for adjustments based on updated financial data.
Residents can review the proposed budget and submit comments by visiting www.folsom.ca.us/budget.
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