Prior to a sales tax, other options were explored, including:

  • 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: MuniServices/Avenu Insights & Analytics)
  • Increase the property tax: While the city’s revenue from property taxes is low (on a $900,000 home the city only gets $1800 in property tax) (source: City of Folsom Department of Finance), laws like Proposition 13 place limits on what can be done here, and it would require voter approval. Also, 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 Transportation Occupancy Tax (TOT): The TOT is a tax paid by visitors on their hotel bills. Increasing the TOT would also 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.
  • Developer Fees: Otherwise known as impact fees, these are collected and used for facilities to serve the new homes and neighborhoods. Developers also pay the new development’s percentage of costs for shared and expansion of existing facilities. Developer fees cannot be used for existing facilities or shortcomings.

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.