City got financial bump during boom
Officials planned for reversal, spent funds on one-time expenses
BY VANESSA GREGORY, Californian staff writere-mail: vgregory@bakersfield.com Saturday, Sep 1 2007 8:45 PM
Last Updated: Saturday, Sep 1 2007 8:51 PM
As new homes went up in Bakersfield during the recent real estate boom, so did city revenues.
Bakersfield expects to take in $63 million in property taxes for the 2007-08 fiscal year.
The taxable value of Kern County property increased 12 percent for that period, according to the assessor-recorder.
Sales tax revenues -- the single largest contributor to the city's general fund -- spiked as well, rising $11.7 million, or 21 percent, between fiscal years 2004-05 and 2005-06.
Then the real estate market dipped, and sales tax revenues fell by about 5 percent to $63 million in the fiscal year that ended June 30, according to city estimates.
"We expected it," said the city's finance director, Nelson Smith.
Put together, sales and property taxes contribute $130 million to the city's $175 million budget, he said.
They fund the police and fire departments, Public Works, Recreation and Parks and other city services.
The city funneled most of the real estate windfall into one-time capital projects, such as road improvements, Smith said.
"We don't want to commit ourselves to ongoing annual costs if we aren't going to get ongoing revenues," he said.
But the city did hire new employees in recent years.
During the building boom, strapped city staffers worked weekends to keep up with the flood of building permit requests pouring into the city.
"We staffed up," said Planning Director Jim Movius.
He expects the city will manage to keep its new hires as the market cools, in part by bringing projects outsourced to consultants back to city staff.
While the building permit requests have slowed, the city continues to be busy and is now working on 18 environmental impact reports -- a record number, Movius said.
The city also beefed up the police force and firefighting staff, according to Assistant City Manager John Stinson.
Statewide, the real estate boom gave a much-needed boost to local governments, said Bill Higgins, senior staff attorney with the Sacramento-based League of California Cities.
"We kind of caught up," Higgins said. "We've been playing catch-up over the past couple of years because housing hasn't been paying for itself, especially lower- and moderate-priced housing, in connection to the amount of services they consume."
The incremental property tax increases allowed under California's Proposition 13 mean many older homes consumed more services than they paid for in taxes, he said.
Today's leveling off in the housing market won't necessarily batter local property tax bases, Higgins said.
The assessment roll -- which is used to determine property taxes -- is unlikely to drop, even if property values were to fall by 15 percent, said Assistant Assessor Tony Ansolabehere.
But a worsening economy could strain local governments in coming years.
"In downturns, there's a greater need for public services," Higgins said. "The pull
is on the demand side more than it is on the supply side."
BY VANESSA GREGORY, Californian staff writere-mail: vgregory@bakersfield.com Saturday, Sep 1 2007 8:45 PM
Last Updated: Saturday, Sep 1 2007 8:51 PM
As new homes went up in Bakersfield during the recent real estate boom, so did city revenues.
Bakersfield expects to take in $63 million in property taxes for the 2007-08 fiscal year.
The taxable value of Kern County property increased 12 percent for that period, according to the assessor-recorder.
Sales tax revenues -- the single largest contributor to the city's general fund -- spiked as well, rising $11.7 million, or 21 percent, between fiscal years 2004-05 and 2005-06.
Then the real estate market dipped, and sales tax revenues fell by about 5 percent to $63 million in the fiscal year that ended June 30, according to city estimates.
"We expected it," said the city's finance director, Nelson Smith.
Put together, sales and property taxes contribute $130 million to the city's $175 million budget, he said.
They fund the police and fire departments, Public Works, Recreation and Parks and other city services.
The city funneled most of the real estate windfall into one-time capital projects, such as road improvements, Smith said.
"We don't want to commit ourselves to ongoing annual costs if we aren't going to get ongoing revenues," he said.
But the city did hire new employees in recent years.
During the building boom, strapped city staffers worked weekends to keep up with the flood of building permit requests pouring into the city.
"We staffed up," said Planning Director Jim Movius.
He expects the city will manage to keep its new hires as the market cools, in part by bringing projects outsourced to consultants back to city staff.
While the building permit requests have slowed, the city continues to be busy and is now working on 18 environmental impact reports -- a record number, Movius said.
The city also beefed up the police force and firefighting staff, according to Assistant City Manager John Stinson.
Statewide, the real estate boom gave a much-needed boost to local governments, said Bill Higgins, senior staff attorney with the Sacramento-based League of California Cities.
"We kind of caught up," Higgins said. "We've been playing catch-up over the past couple of years because housing hasn't been paying for itself, especially lower- and moderate-priced housing, in connection to the amount of services they consume."
The incremental property tax increases allowed under California's Proposition 13 mean many older homes consumed more services than they paid for in taxes, he said.
Today's leveling off in the housing market won't necessarily batter local property tax bases, Higgins said.
The assessment roll -- which is used to determine property taxes -- is unlikely to drop, even if property values were to fall by 15 percent, said Assistant Assessor Tony Ansolabehere.
But a worsening economy could strain local governments in coming years.
"In downturns, there's a greater need for public services," Higgins said. "The pull
is on the demand side more than it is on the supply side."
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