My Opinion: Hard Truth of Upland's Fiscal Health

Upland Residents,

Following Monday night’s Fiscal Year 2025–26 Mid-Cycle Budget Review, I want to share my thoughts and concerns directly with you.

First, I want to acknowledge our staff. The financial data was presented clearly, professionally, and without spin. That level of transparency is exactly what responsible governance requires. We cannot make sound decisions without an honest understanding of where we stand.

Now, here is what concerns me.

Earlier this fiscal year, sales tax revenue was already projected to decline by approximately $1.6 million. Updated estimates now show an additional reduction of $941,883, bringing the total projected decline to $2,541,883.

That is a substantial shift.

Sales tax is the City’s single largest discretionary revenue source. It funds police services, road maintenance, parks, tree trimming, and the core services residents rely on every day. When sales tax moves at this scale, it has real consequences.

Overall, we are looking at roughly a 10 percent decrease from what we adopted in the budget, bringing projected sales tax revenue to approximately $22.8 million. If a household lost 10 percent of its income halfway through the year, it would require immediate adjustments. That is the position we are in.

But what weighs on me even more is the structure of our revenue base.

Fifty-six percent of our sales tax revenue comes from just ten businesses. More than half of our primary discretionary funding source is concentrated in a very small number of entities. That is not diversification. That is exposure.

We are not in a crisis today. But we are operating with a very thin cushion and what I would describe as a fragile revenue base.

I use the word fragile intentionally.

A revenue structure is fragile when small external shifts, fuel prices, auto sales trends, consumer spending patterns- can produce outsized impacts on essential services. It is fragile when losing one or two major contributors could materially affect public safety, infrastructure maintenance, or daily operations. It is fragile when we rely on one-time windfalls to balance ongoing operating costs.

That is where we are.

Lower auto sales and lower gas prices are contributing to this decline. When gas prices fall, families benefit — and that is good. But lower fuel prices also mean less sales tax revenue for the City. Lower prices at the pump translate into less funding for road repairs and infrastructure. It is a double-edged dynamic that highlights how concentrated our revenue structure has become in auto and fuel sectors.

At present, we are technically balancing this fiscal year largely because of one-time revenues including a developer agreement windfall, prior-year deposit adjustments, asset forfeiture transfers, and unclaimed funds. Those are temporary sources. They provide short-term relief but do not create long-term stability.

After all adjustments, we are projecting roughly a $21,000 surplus on a $64 million budget. That is effectively break-even. It leaves virtually no margin for unexpected events.

We are stable today. But stability built on concentration and volatility is not strength. It is vulnerability.

In my view, this is not simply a finance issue. It is fundamentally an economic development issue. Economic development is not about ribbon cuttings. It is about revenue stabilization and protecting core services.

We must broaden our commercial base beyond auto and fuel categories. We need to recruit small and mid-sized businesses across diverse sectors, support locally owned businesses that generate steady year-round sales, streamline permitting processes to reduce barriers, and encourage redevelopment of underperforming commercial properties. Every additional sales tax generator reduces volatility. Every diversified sector reduces concentration risk. Every strengthened local business improves long-term fiscal resilience.

We should also be conducting multi-year forecasting and stress-testing scenarios. What happens if sales tax declines another 5 percent? What happens if one of our top producers leaves? What does long-term reduction in fuel consumption mean for our revenue structure? Responsible governance requires asking those questions now, before circumstances force the answer.

My concern is not about panic. It is about prudence. It is about recognizing early warning signs and responding with discipline and foresight.

We owe it to our residents to protect public safety, maintain infrastructure, and ensure the long-term financial health of this City. That requires acknowledging that our revenue base is fragile, taking diversification seriously, and acting strategically.

That is the conversation we must continue, and the work we must prioritize.