How does Folsom face a money crunch when it is so flush? The mayor explains

Folsom Mayor Justin Raithel used his first State of the City address on Wednesday to frame the city’s recent budget cuts and departmental reorganizations as necessary, long-term reforms to tackle a structural deficit that city leaders contend can no longer be managed through reserves or one-time fixes.

Speaking at the annual event hosted by Choose Folsom, the city’s chamber of commerce, Raithel said the city entered the current fiscal year facing a roughly $3 million general fund shortfall, driven by years of underinvestment in infrastructure, rising pension costs and flat revenue growth. He said the city owns more than a billion dollars in assets but has historically spent far less than what was recommended to maintain them, leading to deferred repairs and higher emergency costs.

“The city of Folsom has $1.2 billion worth of assets on the books but has spent on average just under $14 million per year to maintain them,” he said in the prepared remarks. “... This is unsustainable and has led to more expensive emergency repairs on our aging infrastructure.”

Raithel credited City Manager Bryan Whitemyer with closing the gap through service reorganizations and staffing reductions rather than continued draws on reserves, calling the approach difficult but necessary to stabilize city finances.

“Living within our means’ will not be easy, but it is the right way to run a household, and it’s also the right way to run our city,” Raithel said.

The changes were approved by the City Council in phases late last year, were intended to move the city away from reactive budgeting and toward long-term sustainability.

Public safety featured prominently in the address, particularly changes to the Folsom Fire Department tied to cost savings. Raithel acknowledged that the city reassigned fire apparatus last year, including browning out an engine company, to reduce overtime costs and restore a third daily ambulance, a move that followed months of public debate over response times and service levels.

He said the fire department is now focusing on better data collection and reporting, including neighborhood-level performance metrics, and is exploring regional partnerships to lower costs while maintaining service. Because nearly 80% of fire calls are medical, the city plans to introduce single-role paramedics whose primary responsibility will be emergency medical response rather than fire suppression.

Reithel said to address the budget, the city eliminated some vacant police positions. Raithel also addressed the $700,000 in settlements it recently paid to two former police officers, first reported by The Sacramento Bee. The officers had alleged they experienced severe racial discrimination while on the force.

He said new leadership and policy changes in the department were intended to improve accountability and workplace culture.

“I don’t want to sugarcoat this: These lawsuits were serious, costly to taxpayers, and we have taken concrete steps to ensure we do better moving forward,” he said, noting the settlements are not admissions of fault. “Our city leadership is committed to ensuring all employees are treated with dignity and that any accusations are investigated promptly and fully in the future.”

He also praised the department for “answering 99% of 911 calls within 15 seconds” and the “largest fentanyl seizure in department history” last year.

He also highlighted a $1.6 million renovation coming to the library to address a leaking roof and HVAC issues.

Despite the budget pressures, Raithel pointed to continued economic growth as a stabilizing force, citing major health care investments and new business openings — particularly in the growth developments south of Highway 50 — and rising property values. He said those indicators show Folsom remains attractive to employers and residents, even as city leaders warn that revenue growth has not kept pace with inflation and service costs.

“Folsom is pointed in the right direction,” he said. “We are focused on the right priorities and we will always find the ways to make this city the best place to work, play and raise a family.”

This story was originally published January 28, 2026 at 2:27 PM.