Sacramento Budget and Audit Committee Meeting - September 15, 2026

The Budget and Audit Committee of the Sacramento City Council met on Tuesday, September 15, 2026, at City Hall, 915 I Street, Sacramento. Chair Roger Dickinson presided; Vice Chair Karina Talamantes and Member Eric Guerra were present; Member Caity Maple was absent. The agenda listed the meeting for 11:00 a.m.; it was called to order at 11:11 a.m. and adjourned at 11:51 a.m. The committee adopted the consent calendar and voted to accept and forward the Audit of the Transient Occupancy Tax to the full City Council.

Consent Calendar

• Member Talamantes moved and Member Guerra seconded adoption of the consent calendar; it passed with ayes from Talamantes, Guerra, and Chair Dickinson, with Member Maple absent.
• Item 1 (File ID 2026-01613): Approved the Budget and Audit Committee meeting minutes of August 11, 2026.
• Item 2 (File ID 2026-01462): Accepted the City Auditor's Recommendation Follow-Up Report for the six-month period ending June 30, 2026, and forwarded it to the City Council for approval.
• During discussion, Vice Chair Talamantes praised the City Auditor's online recommendations dashboard, which tracks recommendations, estimated realized benefits, potential monetary benefits, and department breakdowns back to 2010. Chair Dickinson suggested scheduling a future committee meeting for the City Auditor to return with open recommendations that have not yet been completed.

Public Comments & Testimony

• Lambert Davis spoke during the consent calendar, expressing strong support for the City Auditor and whistleblowing departments. He raised concerns about an unidentified company that reportedly received over $100,000 without being required to submit an application and said he had experienced difficulties receiving Measure U funds.
• During public comment on matters not on the agenda, Mr. Davis asked the city to recognize the 80th anniversary of a Del Paso Heights organization, describing it as scandal-free and politically active. He shared a related document with the committee.

Discussion Items

• City Auditor Farishta Ahrary, joined by Jessica Lugo and Kevin Christensen, presented the Audit of the Transient Occupancy Tax (TOT) (File ID 2026-01458), covering fiscal years 2023 through 2025. The audit evaluated the city's administration and oversight of TOT, including restricted revenue expenditures, hotel remittance activity, short-term rental oversight, and benchmarking against the ten most populated cities in California.
• Ahrary explained TOT history: a 4% tax established in 1965 with restricted uses; an increase to 11% in 1990 with 1% directed to the general fund; and a 12% rate since 1994, with 2% to the general fund and 10% to the Community Center Fund. Measure N, approved by voters in November 2022, broadened restricted TOT uses to include economic development projects and visitor-serving facilities that promote tourism and the local economy. TOT revenue reached more than $40 million in fiscal year 2025 after a pandemic-era low in 2021.
• The audit contains four findings and 10 recommendations:
  • Finding 1 (informational): Sacramento's 12% TOT rate is on the lower side among benchmarked cities, but total visitor assessments are slightly on the higher side when including tourism marketing district (STMD) assessments ranging from 1.15% to 3.45% and the 1% tourism infrastructure district (STID) assessment. Sacramento restricts 10% of its 12% TOT; San Diego has the next highest restriction at 9% of up to 13.75%, and Bakersfield has no restrictions. Ahrary confirmed that changing the restricted-use structure would require a public vote.
  • Finding 2: The audit found no inappropriate expenditures of restricted TOT revenue and no recommendations were made.
  • Finding 3 (largest finding): Short-term rental oversight and TOT administration need improvement. The city has good controls over hotels, but limitations exist in identifying all short-term rental operators and new hosting platforms, verifying permit numbers and correct tax rates, and reconciling aggregate platform payments. The audit noted that Airbnb and other platforms do not verify permit numbers, cities can request listing removals through Airbnb's government portal but listings can be re-listed, and the city had a similar vendor contract from 2018 to 2024 that was canceled because service quality declined. Revenue was receiving TOT from four hosting platforms, while about a dozen other platforms with Sacramento listings were not remitting TOT, although the audit could not verify that taxable bookings occurred through each. In one instance, a single operator's monthly reported remittance for one property exceeded the amount the city received from an entire platform for the month. About half of benchmarked cities require more detailed platform-reported data; Sacramento is working on an ordinance update to require detailed monthly property-level information.
  • Finding 4: The revenue division should reduce manual data entry in TOT tracking and consider automation or system upgrades to prevent data entry errors, which were mostly related to applying remittances to different reporting months.
• Finance department staff, including Pete Coletto and revenue manager Brian Howard, agreed with the audit findings. They described enforcement as 'a game of whack-a-mole,' noted that most short-term operators comply, and said the city is working on an ordinance update, enabled by state law, to require detailed monthly property-level reporting from hosting platforms. They also discussed the possible use of third-party vendors to identify unpermitted operators and said new systems would be weighed in the budget process.
• Committee members expressed support for the audit. Vice Chair Talamantes called the issue one of fairness to compliant operators, said the city is leaving money on the table, and encouraged collaboration among revenue, finance, and economic development. Member Guerra supported preserving the restricted structure for bond ratings and warned against using TOT revenues outside their purpose. Chair Dickinson noted the short-term rental portion of TOT is about 5%, or around $2 million per year.

Key Outcomes

• Motion by Member Talamantes, seconded by Member Guerra, to accept the Audit of the Transient Occupancy Tax and forward it to the City Council for approval passed with ayes from Talamantes, Guerra, and Chair Dickinson; Member Maple was absent.
• The consent calendar passed 3-0 with Member Maple absent, approving the August 11, 2026 minutes and forwarding the City Auditor's Recommendation Follow-Up Report to the City Council.
• Chair Dickinson suggested scheduling a future committee review of open/uncompleted City Auditor recommendations.
• Finance staff indicated that a short-term rental ordinance update with new hosting-platform reporting requirements will come to the City Council in the near future, and the city will evaluate options for automated TOT tracking systems.