Sales tax drop hits city
Council meeting: impact fee decision postponed
| Wednesday, Jun 24 2009 10:48 PM
Last Updated Wednesday, Jun 24 2009 10:48 PM
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Bakersfield’s sales tax revenues fell 14 percent in the first quarter — twice as fast as officials expected — putting a nasty dent in a major source of city funds.
The decline left city coffers with $12.7 million for the first quarter, some $2 million less than it took in a year earlier.
The revenues are among the most precious for municipalities because they come with few state or federal strings attached. Local officials can spend such dollars with relative freedom.
Receipts appear to be thinning even further in the current quarter, said Nelson Smith, Bakersfield’s finance director. Preliminary state numbers show local taxes in April could be down by as much as 23 percent. The city expected a drop of about 7 percent from the previous year.
Sales taxes account for about a third of Bakersfield’s general fund, second only to property taxes. The quarterly figures provide no immediate details about sales within various business segments. In Bakersfield, car sales typically provide the single-biggest chunk of sales-tax revenues, with department stores No. 2.
City officials planned to take in about $55 million in sales taxes during the new fiscal year, which starts July 1. Now they city expects to take in $53.1 million.
News of the decline greeted city councilmembers Wednesday evening before they approved a balanced budget for the new fiscal year.
City staffers told the council better-than-expected property tax revenues would offset the sales tax drop in both the current and new fiscal years.
In addition, 11 expected layoffs won’t be necessary due to attrition and administrative shuffling.
The council also postponed a decision on raising traffic-impact fees. They’ll hold a special meeting at noon July 7 to decide the matter.
The delay came after angry feedback from homebuilders and questions about the city’s accounting by the homebuilders’ lawyer. Councilmembers want to look at possibly staggering fee payments.
