Local group proposes 1-cent sales tax increase for Folsom

A local group of citizens have proposed a one-cent sales tax increase to help Folsom recover finances before they get worse. Folsom Takes Action is a "group of concerned Folsom citizens," according to their press release, that are currently focused on taking action, as their name implies, to care for the Folsom community. "Our city is facing a financial shortfall that will negatively impact our public safety, property values and the quality of life we all enjoy," said Residents Supporting Public Safety and Quality of Life Committee co-chair Bruce Cline in the press release. "Nearly 20 years of independent audits show our city has been using public funds responsibly. We don't have a spending problem - we have a revenue problem. Sales tax through online sales mostly ends up in the County, not in Folsom, and we can fix that." Folsom Takes Action proposed a 1-percent sales tax. However, they want to ensure it will be used solely for traffic, public safety, street repairs and other quality-of-life improvements to the city, as opposed to the general fund or city employee retirement pensions. According to the measure proposed by the group on and received by the city Dec. 5, 20 percent of revenue generated through the sales tax would go to police and crime reduction, 20 percent for fire, rescue and emergency medical services, 15 percent for parks, recreation facilities and trails, 15 percent for traffic mitigation and environmental water quality, 15 percent for community enhancement and economic development and 15 percent for major capital improvement projects. The proposal estimates the tax will raise $29 million annually. The tax will require a Citizens Oversight Committee to oversee the fund's usage. According to Folsom Takes Action, the committee will be comprised of one representative each from the city finance department, police department, fire department, a recreational sports organization, a parks and trails organization, a representative focused on streets and environmental stormwater, a business community organization and two at-large members who are residents of Folsom. Folsom City Manager Elaine Andersen previously presented the sales tax increase at a special City Council meeting Oct. 24. She said, "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." The passing of this sales tax would double the local sales tax the city receives, according to Andersen. The city recognized the need for a sales tax increase, with Andersen saying, "We have reached a crossroads where we are projecting growing structural deficits beginning in the next fiscal year and increasing from here. Structural deficit does not mean we are in deficit right now. It means that, looking forward, if we want to keep doing exactly what we are doing right now, we will be unable to continue to do so." The city received funding from the American Rescue Plan Act (ARPA), which provided relief funding from factors caused by the COVID-19 pandemic. While ARPA funding temporarily helped the city's expenditures, funds were only dispersed once and, "ARPA won't happen again, to our knowledge," Andersen said. Andersen also addressed how Folsom compares to neighboring cities, describing Folsom as "pale" when it comes to how much is in the city's reserve funds. Areas such as Rancho Cordova and West Sacramento tend to have 88 to 80 percent of reserves from general fund expenditures, whereas Folsom sits at 29 percent. "Low reserve levels threaten the city's ability to provide essential services in the future and ensure that future obligations are met," Andersen said. Despite the council's use of ARPA funds and "other tactics that are no longer available to us," the city anticipates a deficit in the foreseeable future. Thus, the potential for a sales tax increase to go into the general fund was proposed. Previous discussions from late 2022 had a local sales tax ballot proposal, however, the council previously declined the language of the ballot. Council similarly took action at the Oct. 24 special meeting, requesting the proposed language be reviewed and brought back at a January 2024 meeting.