Kingsburg revenue forecast looks steady while CalPERS liabilities rise, city warns

City staff presented a revenue forecast and a separate update on CalPERS pension liabilities at the March 19 Kingsburg City Council meeting. Staff said sales and property tax receipts are generally tracking above earlier projections, but the city faces rising pension costs driven by CalPERS funding assumptions and an increasing unfunded actuarial liability (UAL).

City Manager Alex Henderson briefed the council on major revenue sources, saying Bradley‑Burns sales tax receipts and the city’s 1% Measure E public‑safety sales tax are both tracking at or above recent projections. He noted that fuel sales at service stations remain an important portion of local sales tax collection and that transient occupancy tax (hotel bed tax) and permit revenues have been steady.

Henderson then reviewed CalPERS mechanics: normal costs (a payroll percentage) and UAL payments (the amortization of past shortfalls). He said CalPERS’ current discount rate is 6.8% and that investment returns over several recent years have been below that assumption in multi‑year averages — a factor that increases UAL obligations for employers.

Henderson said the city has been managing pension exposure by prepaying annual UAL amounts (which saves a month of interest), implementing employee cost sharing to the allowable level, and setting a policy to direct 70% of surplus funds to a UAL reserve. He said the city has made additional discretionary payments in the past and plans to monitor actuarial reports when released later this year.

“Pension requirements are a large and growing portion of the city’s budget,” Henderson told the council, adding that next year’s UAL payment projection represents a meaningful increase versus recent years. Staff said the city will continue to evaluate ways to buy down the liability when prudent and fiscally responsible.

The presentations were informational and required no council vote.