Shopping in Rancho Mirage could soon get slightly more costly, as the city is asking its residents to vote on a one-cent sales tax increase in the November general election, citing increasing costs for police, fire and other city services.
The city council unanimously agreed to put the sales tax hike on the ballot during its meeting Thursday, July 16. Under the measure, the sales tax rate in Rancho Mirage would jump from 7.75% to 8.75%, an increase estimated to generate $7.5 million in annual revenue for the city.
Rancho Mirage is one of only two cities in the Coachella Valley that still has the 7.75% sales tax rate, along with Indian Wells, and a majority of that sales tax revenue is earmarked for the state, with a smaller portion going to Riverside County and local municipalities. Most valley cities have a rate of 8.75%, while Palm Springs and Cathedral City have the valley’s highest rates, at 9.25%.
The proposal emerged as the city has seen increasing costs for public safety services, infrastructure maintenance, insurance, construction materials and more, according to Kofi Antobam, the city’s director of administrative services.
“While the City has implemented numerous cost-control measures and remains fiscally sound, these cost pressures are projected to continue increasing faster than existing revenues,” Antobam wrote in a report to the council.
The rising costs have been particularly pronounced for police and fire services, which the city provides by contracting with the Riverside County Sheriff’s Department and Cal Fire/Riverside County Fire Department.
Those services typically comprise about half of the city’s spending from its general fund, and the city’s costs for those contracts and related services have increased by more than 56% since 2020, according to Antobam and city budget documents.
The sharp increase in costs emerged as the city has seen greater demand for fire and paramedic services, with those calls for service — most of which are for medical emergencies — up by about 39% over the same period, Antobam wrote.
Antobam said the city has taken some steps to try to reduce its spending, including reducing staffing levels by about 11% over the last three years, renegotiating contracts when possible, and investing in technology intended to improve the city’s operating efficiency.
“While these actions have helped control expenditures, they do not fully offset long-term cost increases associated with public safety, infrastructure, insurance, and operational expenses,” Antobam wrote.
During the meeting, Antobam noted the city’s general fund spending is estimated to outpace its forecasted revenue by the 2027-28 fiscal year.
City officials also noted visitors and tourists generate roughly 75% of sales tax revenue in Rancho Mirage, and many items, such as rent, prescription medicine and most groceries, are exempt from sales tax under state laws.
The council’s vote came after the city recently held a few town halls to discuss its fiscal outlook with residents.
Rancho Mirage voters will have final say
The five members of the council agreed that putting the 1% sales tax measure on the ballot was an appropriate step to find out how voters feel about the question.
Councilmember Steve Downs described the proposal as a “fairness measure” allowing voters to tell the city how to handle the looming budget shortfalls. He pointed to some specific financial pressures facing the city, with roughly $17 million in road upgrades needed over the next few years.
Downs said police and fire costs are expected to continue to rise in the coming years and, if they maintain their current rising trends, could eventually comprise about three-quarters of the city’s general fund spending.
“We have to do something, and we have to know what the residents of the city want us to do,” Downs said. “Do you want us to raise additional revenues, or do you want us to cut expenses?”
Mayor Pro Tem Michael O’Keefe pushed back against a couple of emails he received from people suggesting the city cut funding from community programs to balance its budget. He mentioned several city-funded offerings, from free reading programs at the library to its support for regional programs focused on food insecurity and homelessness.
“We could eliminate (those programs), but it is not who we are,” O’Keefe said. “When we invest in these programs, we are not wasting money. We are protecting values that make Rancho Mirage a community of excellence.”
Ahead of its vote, the council heard from just one resident, Brad Anderson, who opposed the move and said he was concerned about the city’s transparency if it gets the added revenue. He also said he felt it was “unethical” that the sales tax hike would mostly be covered by out-of-town visitors.
As it heads to the ballot, the proposed sales tax increase will require approval from a simple majority of voters who cast ballots in the Nov. 3 election to take effect.
Tom Coulter covers local government and politics for The Desert Sun. Reach him at thomas.coulter@desertsun.com.
This article originally appeared on Palm Springs Desert Sun: What voters need to know about possible Rancho Mirage sales tax hike
Reporting by Tom Coulter, Palm Springs Desert Sun / Palm Springs Desert Sun
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By Tom Coulter, Palm Springs Desert Sun | USA TODAY Network
