How Did We Get Here?

Inflation, rising staff costs (even though there are fewer city employees today than in 2008), and “The Amazon Effect” have all contributed to our current financial situation.

The Amazon Effect has had probably the biggest impact on our revenues as online shopping diverts more of Folsom’s sales tax revenue to the county, and other cities. In short, the Amazon Effect is a reason for everyone to “shop local.”

When you buy taxable products at a brick-and-mortar store in Folsom, the city gets 1-cent for every dollar of sales tax, the rest of the sales tax you pay goes to the County and the State.

Flattening the Sales Tax

(Slide source: City Manager presentation to Folsom City Council, 10-24-23)

When you buy online, however, that 1-cent goes into a County pool (instead of coming to Folsom), where it is divided up among all the cities in Sacramento County – and not equally. As a result Folsom only gets a fraction of that penny, the rest goes to other cities. The result is our sales tax revenues are flattening, while they were initially projected to keep rising. Shopping locally, and increasing revenues from online sales, are the only way to ensure money spent in Folsom stays in Folsom.

Rising staff costs are another factor, even though Folsom has fewer city employees today than it did in 2008. The number of budgeted city employees, including police officers and firefighters, was 568 in 2007/2008, and sits at 490.5 today.  That’s a drop of 13 percent, even as the city’s population has grown by 18 percent in that same time.

The City of Folsom has talented and engaged professionals working within the police, fire and city departments. Providing quality city services requires recruitment of  quality professionals. To attract and retain talent means competitive salaries, ongoing training and the necessary equipment for job performance.

City Staff: 2008-2023

(Slide source: City Manager presentation to Folsom City Council, 10-24-23)

Inflation has made the cost of some “routine” maintenance and improvement projects too high. A piece of lumber that cost $5 in 2019 costs $6.02 today – a cumulative inflation rate of more than 20 percent. It’s the same for any building materials or other supplies needed to build, improve or enhance parks, sports fields and other amenities, and the result is the city already has to prioritize which projects already on the “to-do list” it can afford.

Sales Tax: Why Does It Matter

(Slide source: City Manager presentation to Folsom City Council, 10-24-23)