Buy Photo

Henry A. Barrios / The Californian

Bakersfield City manager Alan Tandy in a 2012 photo.

With sales tax down, and staff retirement and healthcare costs rising, the city of Bakersfield will be "proceeding with caution," City Manager Alan Tandy said Friday in his weekly memo to the city council.

Those are exactly the words Finance Director Nelson Smith chose Wednesday during a mid-fiscal year presentation on the state of the city budget.

"Sales tax is trending below budget estimates," Smith told the council. "I'd suggest we proceed with caution. These cautionary tones will be reflected in the budget instructions."

He referred to the budget instructions for the upcoming fiscal year 2014-2015 budget, which city staff has begun drafting.

In its proposed fiscal year 2013-2014 budget, for the fiscal year ending June 30, the city estimated it would collect about $2.1 million in sales tax -- but for the two quarters of the fiscal year already past, the city has collected about $560,000 less than expected.

At last week's presentation, Smith also said that the city's unfunded liability in the California Public Employees' Retirement System increased by $8.7 million -- the result of CALPERS investments that did not perform as well as expected.

"Boy, is it disappointing to see the unfunded liability increase to $8.7 million," Ward 5 Councilman Harold Hanson said at Wednesday's council meeting. "I guess we have to wait five years for the stock market to kick in to see that turn around."

Smith responded that a rebound might not take quite that long.

"These reports run about a year behind," Smith said. "I know they're doing better more recently, but that's one reason why our unfunded liability increased."