Bakersfield’s sales tax revenue during April, May and June dropped 9.6 percent compared to the same period in 2015 — a potentially punishing shortfall that should be offset with $3 million in one-time money from the state, City Manager Alan Tandy said on Friday.
Reasons for the drop aren’t yet known, but continued low oil prices and industry activity are among the likely causes.
Each percentage point of sales tax earned brings the City of Bakersfield about $700,000, making the 9.6 percent worth about $6.7 million, were it to continue for an entire year.
Tandy said that’s not likely, as “the quarters aren’t all equal” due to seasonal revenue boosters like holiday sales.
The City of Bakersfield reduced departmental budgets and eliminated 14 vacant positions from the nearly $461.5 million budget for the current fiscal year, and predicted zero growth in sales tax revenue through June 30, 2017.
Tandy said further cuts are not currently planned, but “continued fiscal prudence is warranted” in his weekly memorandum to Mayor Harvey L. Hall and City Council members.
“It’s not a huge surprise but it is well below our budget projection,” he said in an interview.
The $3 million in state money comes to Bakersfield because of the end of the so-called “triple flip,” in which the state recalculated the distribution of three municipal revenue sources to improve its own bottom line.
Councilman Terry Maxwell, who has been critical of Bakersfield pledging state gas tax revenue and other monies to repay millions it will borrow for major road projects, pointed out that won’t happen again.
“We got lucky here. If that $3 million hadn’t fallen on our doorstep what would we be talking about?” Maxwell said.
Councilman Bob Smith, who represents northwest Bakersfield, said the news was “not unexpected,” but expressed hope that by spending millions in federal earmarks on major road projects, the City of Bakersfield will give the local economy a boost.
“We would be considerably worse off if we weren’t receiving that money,” Smith said.
Vice Mayor Harold Hanson, a councilman from the southwest, said he’s hopeful the economy will begin to revive after the election.
“The triple flip money is going to help us ... but if it continues this way for another year or so we’ve got a real problem,” Hanson said.