Bakersfield residents spent more money in 2017 than they did in 2016, according to data from the City of Bakersfield.
Data shows that sales tax revenue went up 8.3 percent from October through December, totalling $18.6 million compared to $17.4 million last year. For the year, sales tax revenue went up 6.7 percent to $69 million from $64.6 million in 2016.
“While we hope this positive movement continues, we must exercise caution not to expect continued revenue growth at these levels for any length of time,” City Manager Alan Tandy said. “It’s still a challenging environment for us financially.”
The third quarter saw the biggest revenue increase of the year, going up 13.2 percent from 2016 to $17.4 million. Finance Director Nelson Smith said industry data shows that the sale of gas, used cars and heavy industrial equipment for construction use were the primary factors in the increase.
The factors for the fourth quarter growth is not known yet, as Smith said the city has not yet received the industry data for it, but it is likely the holiday shopping season was one of them.
While the last quarter didn’t have such a huge percentage increase, it made up for it by bringing in around $1.4 million more in revenue compared to the third quarter.
Smith said the tally for the year more than doubled the city’s original estimate of 3 percent growth for 2017. However, while the city received nearly $5 million more in sales tax revenue last year, it has essentially gotten revenue back to where it was before a below-average 2016-17 fiscal year.
Smith said it needs to be taken into consideration that the 2017 figures were being compared to 2016 ones, which Smith considers to be abnormal compared to the city’s typical earnings over the years.
“The reason they look so good is because the 2016 numbers were so low,” he said. “It’s not very difficult to beat.”
Between the 2011-12 and 2014-15 fiscal years, sales tax revenue was at or around $70 million each year, according to a chart provided by the city. This year has made up for a $5 million drop in 2016, bringing sales tax revenue back to normal.
Smith said the 2016 decrease was largely due to a drop in oil prices and the subsequent effect on the city’s economy. He said he would consider $17 million per quarter to be a typical amount. While the last quarter of 2017 may be slightly above normal, Smith said the year overall should also be considered typical.
The overall growth for the year is slightly higher than the average, he said. Prior to the 2008 economic recession, sales tax revenue had increased 5 percent to 6 percent each year, a pattern he hopes the city can get back to.
“We are still well below our historic trend line of revenue growth,” Tandy said. “This is not a cure-all.”
The data comes as the city is facing a revenue shortfall due to rising costs associated with CalPERS, employee health costs and other factors.
The shortfall was estimated to reach $16 million by the 2022-23 fiscal year, but Smith said that could be offset a little bit due to the increases seen particularly in the last two quarters of 2017 and if sales tax revenue continues to grow in 2018.
“It’s going to help, but it’s not going to solve it,” he said.
Tandy said he doesn’t expect anything but “modest growth” over the 2017 numbers.
The city is still interested in putting a sales tax measure on the November ballot to further reduce the shortfall. In December, the Bakersfield City Council approved an agreement with Fairbank, Maslin, Maullin, Metz and Associates to conduct a survey to see if voters would support a sales-tax measure.
Tandy said the results of the survey will be revealed next week when it is presented to the City Council during its March 21 meeting.