RECOMMENDED ACTION

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1) Adopt Resolution No. 2026-(Next-in-Order), Calling for the Placement of a General Tax Measure on the Ballot for the November 3, 2026, General Municipal Election for the Submission to the Qualified Voters of an Ordinance to Enact a Transaction and Use Tax at the Rate of One Cent (1¢);

2) Adopt Resolution No. 2026-(Next-in-Order), Providing for the Filing of Primary and Rebuttal Arguments and Setting Rules for the Filing of Written Arguments Regarding a City Measure to be Submitted at the November 3, 2026, General Municipal Election;

3) Adopt Resolution No. 2026-(Next-in-Order), Requesting the Board of Supervisors of the County of Riverside to Consolidate a General Municipal Election to be Held on November 3, 2026, with the Statewide General Election to be Held on that Date Pursuant to Section 10403 of the Elections Code; and

4) Consider designating a member or members of the City Council to author and file Primary Argument(s) for or against the ballot measure.

 

DISCUSSION

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Background

The City of Rancho Mirage historically maintains balanced budgets while providing a high level of public services, infrastructure maintenance, public safety protection, parks and recreation amenities, library services, and community programs.

Over the last several years, the City has experienced increasing costs associated with public safety services, infrastructure maintenance, insurance, labor, construction materials, equipment, and contracted 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.

As part of the Fiscal Year 2025-26 and Fiscal Year 2026-27 budget discussions, the City undertook a comprehensive public information effort regarding City finances, municipal services, infrastructure needs, and long-term fiscal sustainability. The purpose of the outreach effort was to provide information to the public regarding City services and revenues and to obtain community feedback regarding service priorities and future funding needs.

 

ANALYSIS

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Funding Needs and Fiscal Challenges

The City's General Fund serves as the primary operating fund supporting municipal services, including public safety, public works, parks and recreation, library services, and general government operations.

The Fiscal Year 2026-27 General Fund operating budget includes approximately $38.5 million in expenditures and approximately $39 million in projected revenues. Although the budget remains balanced, several long-term financial pressures continue to affect the City.

Public Safety

Public safety represents the City's largest operating expenditure.

Since 2020:

• Fire and EMS service requests have increased approximately 39%;
• Sheriff responds to over 18,000 calls for service each year;
• Sheriff and Fire Department service costs have increased by more than 56%.

While crime trends and response figures have improved significantly in recent years, maintaining current service levels requires continued investment in personnel, equipment, technology, emergency response capabilities, and regional public safety partnerships. In total, public safety expenses account for approximately half of the city’s general fund operating expenditures.

  

Infrastructure

The City maintains approximately 91 miles of streets and roads, sidewalks, traffic signals, drainage systems, public facilities, parks, fire stations, and other public infrastructure.

A 2021 pavement management study found approximately 85 percent of the City's roadways were in fair-to-good condition. However, roadway replacement costs now exceed approximately $1.5 million per mile.

In addition, the City continues to address:

• Aging public facilities;
• ADA accessibility improvements;
• Fire station modernization needs;
• Facility maintenance requirements; and
• Future capital replacement obligations.

The City does not have a dedicated revenue source for capital improvements. Any capital-related expenses must be funded through reserve spending or a general fund surplus. The City’s general fund operating margins have been shrinking year after year.

Economic and Revenue Challenges

The City relies heavily upon economically sensitive revenues, including Transient Occupancy Tax (TOT) and Sales Tax.

Rancho Mirage's revenue structure is heavily influenced by visitor activity. An estimated 75 percent of sales tax revenue generated within the City is paid by tourists and visitors rather than Rancho Mirage residents. In addition, TOT and Sales Tax together account for approximately half of General Fund revenues. While these revenue sources provide significant benefits to the community, they are also sensitive to economic conditions, tourism trends, and consumer spending patterns.

At the same time, labor, insurance, equipment, construction, and contracted service costs continue to rise.

 

Fiscal Management Actions

To address rising costs and preserve fiscal stability, the City has undertaken a variety of cost-control and efficiency measures, including:

• Reducing staffing levels by approximately 11% over the last three years;
• Pursuing state and federal grant funding opportunities;
• Renegotiating contracts where possible;
• Maintaining a two-year budget cycle to improve long-term planning;
• Investing in technology to improve service delivery and operational efficiency; and
• Strategically utilizing reserve funds for infrastructure investments and one-time capital projects.

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.

Potential Transactions and Use Tax Measure

One potential funding option available to the City is a locally controlled Transactions and Use Tax (Sales Tax) measure. The proposed measure would increase the City's sales tax rate by one percent (1.0%), increasing the total sales tax rate from 7.75% to 8.75%. Staff estimates the measure would generate approximately $7.5 million annually in locally controlled revenue for the City's General Fund. An estimated 75% of sales tax revenue generated within Rancho Mirage is currently paid by tourists and visitors rather than City residents. As a result, a substantial portion of the revenue generated by the proposed measure would be paid by individuals visiting, shopping, dining, or staying within the City.

As a general tax measure, all revenues generated would remain local and could not be transferred to another jurisdiction.

Regional Sales Tax Comparison

Rancho Mirage currently maintains one of the lowest sales tax rates in the Coachella Valley.

Current sales tax rates are as follows:

If approved by voters, Rancho Mirage's sales tax rate would increase to 8.75%, matching several neighboring cities. The City currently receives only one cent of the existing 7.75% sales tax rate collected within Rancho Mirage.

 

 

The proposed additional one-cent Transactions and Use Tax would be returned directly to the City and retained for local use. Rancho Mirage would receive the full amount of the additional 1%; other jurisdictions or taxing agencies would not receive additional revenue.

Certain purchases would remain exempt from sales tax under State law, including:

• Most groceries;
• Prescription medications;
• Rent;
• Utilities;
• Medical supplies; and
• Items purchased using CalFresh benefits.

Community Outreach and Public Information Efforts

Prior to consideration of a potential ballot measure, City staff conducted an extensive public information and community engagement effort regarding City finances, service demands, infrastructure needs, and long-term fiscal sustainability.

Outreach efforts included:

• Creation of a dedicated "Financing City Services" webpage containing information regarding City services, budget information, fiscal challenges, revenue sources, and potential funding options;
• Publication of a four-part educational newsletter series addressing:
  • Public Safety;
  • Streets, Roads and Infrastructure;
  • Budget and Revenue Overview; and
  • Fiscal Management and Cost-Control Measures;
• Development and distribution of a digital community priorities survey allowing residents to provide feedback regarding City services and funding priorities;
• Direct mail notifications to Rancho Mirage households informing residents of community meetings and opportunities for public participation;
• Two public town hall meetings open to all residents, including one at Rancho Mirage City Hall and one at the Rancho Mirage Library and Observatory;
• One virtual town hall conducted via Zoom;
• Two informational town halls conducted specifically for City commissioners;
• Presentations and discussions with community organizations and stakeholder groups;
• Ongoing communications through City newsletters, social media platforms, and public information channels.

The goals of the community outreach initiatives were to provide information to the community regarding city operations and finances and to obtain feedback regarding community priorities. Throughout the outreach process, staff emphasized that no decision had been made regarding a potential ballot measure and that any tax measure would require voter approval.

Proposed Ballot Question

Should the City Council approve placement of the measure on the ballot, voters would be asked to consider the following ballot question:

"RANCHO MIRAGE PUBLIC SAFETY, ROADS, CITY SERVICES MEASURE. Shall the measure maintaining Rancho Mirage's long-term financial stability, City services such as 9-1-1 emergency medical/fire response, fire protection, Sheriff's patrols, crime prevention/response programs; keeping public areas safe/clean; maintaining streets, roads, parks, libraries, fire stations; retaining/attracting local businesses, other services, by establishing a 1¢ sales tax generating approximately $7,500,000 (seven point five million dollars) annually until ended by voters, requiring public spending disclosure, funds for Rancho Mirage only, be adopted?"

 

ELECTION REQUIREMENTS

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Council Approval Threshold

Pursuant to applicable California law governing local general tax measures, placement of the proposed measure before voters requires approval by at least four-fifths (4/5) of the City Council.

Because the Rancho Mirage City Council consists of five members, a minimum of four affirmative votes is required to place the measure on the ballot.

Voter Approval Threshold

If placed before voters, the proposed Transactions and Use Tax would require approval by a simple majority vote (50 percent plus one) of voters voting on the measure.

Election Process and Key Deadlines

If the City Council approves placement of the measure on the November 3, 2026 Statewide General Election ballot, staff will work with the City Attorney and Riverside County Registrar of Voters to complete all required election procedures and filings.

Major election deadlines include:

• August 6, 2026 – Last regular City Council meeting to consider placing a measure on the November 3, 2026 ballot.
• August 7, 2026 – Deadline to submit ballot measure materials to the Riverside County Registrar of Voters.
• August 12, 2026 – Deadline to withdraw measure.
• August 17, 2026 – Deadline for submission of the City Attorney's impartial analysis and primary ballot arguments.
• August 27, 2026 – Deadline for submission of rebuttal arguments.
• November 3, 2026 – Statewide General Election.

The City Attorney will prepare the impartial analysis of the measure in accordance with California Elections Code requirements. If approved by a majority of voters voting on the measure, the Transactions and Use Tax would become effective pursuant to State law and applicable administrative procedures.

Ballot Arguments and Rebuttal Arguments

If the City Council approves placement of the measure on the ballot, the Council will also be asked to authorize preparation and submission of the ballot argument in favor of the measure, as permitted by the California Elections Code.

The City Council may authorize the City Council, individual Councilmembers, or an Ad Hoc Committee of the City Council to prepare and submit the argument in favor of the measure and any related rebuttal arguments.

 

FISCAL IMPACT

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Election administration costs associated with placing the measure on the ballot will be paid from existing City funds.

If approved by voters, the proposed one-percent Transactions and Use Tax is estimated to generate approximately $7.5 million annually in ongoing locally controlled General Fund revenue.

 

ALTERNATIVES

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If the City Council elects not to place the measure before voters, or if the measure is placed before voters and is not approved, the City would continue to provide services using existing revenue sources. However, as expenditures continue to outpace revenue growth, the City Council may need to evaluate future spending priorities, reserve utilization, capital improvement schedules, and other fiscal management strategies to maintain long-term financial sustainability.

 

CONCLUSION

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Rancho Mirage continues to maintain a stable financial position and provide a high level of public services. However, increasing costs associated with public safety, infrastructure, insurance, labor, and other municipal services continue to place pressure on existing revenue sources and long-term financial sustainability.

The City has undertaken extensive public outreach and community education regarding these issues and has provided numerous opportunities for public input. Adoption of the proposed resolutions would not enact a tax increase. Rather, it would provide Rancho Mirage voters with the opportunity to determine whether a locally controlled funding source should be established to support City services, infrastructure, and long-term fiscal sustainability. The ultimate decision regarding the proposed measure rests with Rancho Mirage voters.