Lesson 1: Where city money comes from (draft)

DRAFT. This lesson is not final.

The idea: scarcity and trade-offs. Sowell starts from a simple point: people want more than there is, so every choice gives something up Unverified1. In A Conflict of Visions and The Vision of the Anointed, he contrasts a view that hard problems can be "solved" with a view that they are trade-offs, where you choose which cost to accept Unverified2 3. A city budget is a good place to see this. The money is limited, so each dollar spent on one thing is not spent on another.

Key takeaways

Two sales tax lines make up about 44% of what the city budgeted to bring in for FY2026 Calculated4.
The city's audit says its sales tax is "very volatile" Verified5.
In June 2025 the city closed a budget gap by trading away pay and other items. Those are the trade-offs Verified6.

The numbers

The General Fund is the pot that pays for everyday services like police, parks and planning. For FY2026 (July 2025 to June 2026), the city budgeted $5,744,157 coming in. Two of the lines are sales taxes Verified4:

Source, FY2026 budget	Amount
Sales and use tax (state formula)	$1,598,567
Local sales tax	$949,662
Both together	$2,548,229
All General Fund revenue	$5,744,157

Together the two sales tax lines are about 44% of the total Calculated4. The same lines were budgeted at $3,024,479 for FY2025. The FY2026 budget expects $476,250 less, or 15.7% less Calculated4.

What actually came in fell too. The city's FY2025 audit says sales tax revenue was $2,428,890 in FY2023 and $1,753,323 in FY2025, a drop of $675,567, or 27.8%. Hotel tax (transient occupancy tax) went from $528,284 to $430,276, down 18.6% Verified5. The audit gives reasons: the earlier years were boosted by pandemic spending, and a large part of Williams sales tax comes from gasoline sales, so it goes up and down with demand and gas prices Verified5.

The trade-offs in real life

In June 2025, staff reported shortfalls of $1,170,146 for FY2026 and $1,302,780 for FY2027. They said two negotiated actions would help the city avoid layoffs: a 10% furlough for all employees and ending a 3% cost-of-living raise planned for July 1, 2025. With those, the shortfalls shrank to $65,159 and $229,669 Verified6. The staff's list of other steps also included leaving a Public Works Director position unfilled, leaving one police officer position vacant, deferring a Housing Element update, and using a one-time rebate Verified6.

Our reading (not a verdict): Each step on that list gave something up. That is what Sowell means by a trade-off. Whether the city chose well is a question for residents and the Council. The lesson is to look for the list of what was given up.

Try it

If sales tax falls again, which of the items above could the city give up next? What would be lost?
Which lines of the budget would you want the city to protect? What would you give up to protect them?
Where in the packet or budget could you check?

Next: Lesson 2, funds, reserves and deficits →

Sources cited on this page

Basic Economics: A Common Sense Guide to the Economy (5th ed., 2014; first edition 2000), Thomas Sowell (Basic Books; unofficial / third-party; accessed 2026-11-09) Publisher's catalog page. We rely on the publisher's description (it says the book shows how to critique economic policies by the incentives they create rather than the goals they proclaim). We have not checked page text and quote nothing from the book. ↗
A Conflict of Visions: Ideological Origins of Political Struggles (1987; revised ed., 2007), Thomas Sowell (William Morrow (1987); Basic Books (2007); unofficial / third-party; accessed 2026-11-09) Publisher's catalog page for the 2007 Basic Books edition. We rely on the publisher's description of the "constrained" and "unconstrained" visions. We have not checked page text and quote nothing from the book. ↗
The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy (1995), Thomas Sowell (BasicBooks (Basic Books); unofficial / third-party; accessed 2026-11-09) Google Books catalog record (paperback listed as 1996). We rely on the catalog description and public discussion of the book's trade-off theme. We have not checked page text and quote nothing from the book. ↗
Two-year budget, FY2026 and FY2027 ("submitted 7.16.25") (City of Williams; official; accessed 2026-10-23) Scanned and partly sideways. Figures used here come from Exhibit A (PDF page 7, titled "City-Wide Fund Summary and Preliminary Operating Budgets"), Exhibit D (PDF page 11) and the department pages (PDF pages 13 to 26, headed "Proposed"), read by eye. The department totals add up to the Exhibit A totals. ↗
City Council agenda packet, September 16, 2026 (file named "Packet 9.10.26") (City of Williams; official; accessed 2026-10-23) Holds the August 19, 2026 minutes (Resolutions 26-23 to 26-27; Ordinances 278-26 on noise and 279-26 adopted) and the audited financial statements for the year ended June 30, 2025 (General Fund budget-to-actual on PDF page 207; management discussion on PDF pages 149 to 151). Text layer. ↗
City Council agenda packet, June 18, 2025 (City of Williams; official; accessed 2026-11-09) Listed on the city's Agenda & Minutes page. Item 5 (PDF page 25) is the staff report "Budgetary Guidance on Resolving Shortfalls in FY2026 and FY2027"; PDF page 27 is the "General Fund Shortfall with Potential Solutions" table. Scanned; pages 25 and 27 read as images. ↗