Given uncertainties in the economy these days, San Rafael City Hall is right to take a cautious approach as it enters a new fiscal year.

If it was a traffic signal, the proposed budget detailed by city staff would be a flashing yellow light.

The city’s budget is directly tied to the economy, relying heavily on sales and property taxes — and an expectation that they are going to continue to grow.

While local households feel economic swings almost immediately, they don’t hit local government revenue until about a year later. So foreseeing what’s coming and weighing uncertainties of what may be around the next fiscal bend is wise. Being prepared for possible financial headwinds is prudent.

Sales tax, at 24% of the city’s revenue, is expected to be flat, coming short of the 3% to 4% increase the city had planned for. Property tax revenue appears to be on a pace to rise by 4.1%. Despite that, the Trump administration is rolling back federal grants, which means there’s good reason for caution.

Revenue is not keeping pace with earlier budget projections. Steps taken now can help avert a budget crisis later.

This challenge certainly ramps up the city’s talk about rebuilding its reserves, money that could be relied upon in case of an emergency or to cover unexpected expenses.

In addition, the economic uncertainties are troubling with the City Council having already promised workers long-term contracts for three years of annual raises. While the City Council’s stated commitment has been to keep salaries and benefits at levels that should enhance recruitment and retention of its workforce, the promised raises are likely to factor into the city’s ability to increase its staffing.

When the pace of raises exceed the growth of revenue needed to cover them, it is good reason for caution.

The city also has to plan for a 3.8% increase in its annual pension bill, bringing the yearly total of $25.9 million, or a sizable 23% slice of the city’s personnel budget. With more retirees getting pension checks than current workers paying into the fund, pressure on this important cost of the city keeping a long-term promise continues.

The city’s proposed 2025-26 spending plan, while cautious in sum, still provides strong funding for basic municipal priorities such as maintaining police and fire protection services and keeping city parks, roads and pumps in good repair.

The staff’s message may dampen the otherwise bright outlook the City Council likes to paint when it comes to promoting the city’s performance and future, but it is a message the council and the public nears to hear and heed.

Part of staff’s responsibility is turning on that flashing yellow light when it’s warranted.

When revenue isn’t keeping up with projected expenditures it is wise to take stock and hit the brakes.