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HdL Sales Tax Report for CY2021 Q1 Saleswww.hdlcompanies.com | 888.861.0220 Q1 2020* Q1 2021* Legend $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 SALES TAX BY MAJOR BUSINESS GROUP*Allocation aberrations have been adjusted to reflect sales activity General Consumer Goods County and State Pools Autos and Transportation Restaurants and Hotels Food and Drugs Fuel and Service Stations Building and Construction Business and Industry TOP 25 PRODUCERSCITY OF ENCINITAS HIGHLIGHTS Published by HdL Companies in Summer 2021 SALES TAX UPDATE CITY OF ENCINITAS 1Q 2021 (JANUARY - MARCH) 7 Eleven 76 Best Buy BMW of Encinitas Cardiff Seaside Market Dick’s Sporting Goods Encinitas Ford Financial Services Vehicle Trust Hansen Surfboards Herman Cook Volkswagen Home Depot Home Goods Quick Shine Car Wash Ralphs REI Scotty Cameron Gallery Shell Shell Car Wash At Encinitas Ranch Target TJ Maxx Trader Joes Valero Vons Vuori Walmart Supercenter Encinitas’ receipts from January through March were 32.7% above the first sales period in 2020. Adjusting for reporting aberrations, which included numerous tax payment delays at the beginning of the pandemic last year, actual sales were up 15.6%, outperforming the State and regional trend. The rebound from last years’ pandemic was strong among multiple categories, but particularly for sporting goods, bicycle, home furnishing stores and other general consumer goods retailers. Most of these businesses were fully open after last year’s closures and consumers also felt safer venturing out of their homes to shop in these stores with the rapid roll- out of effective vaccines. Auto-transportation related receipts were up 30%, outpacing the 20% statewide trend. Allocations from the San Diego use-tax pool also grew 24%. Internet sales continue to surge, and this is where much of the money from these transactions is allocated. The only major business category to post a material decline was restaurants and hotels, with fine dining and casual dining eateries challenged by the indoor dining restrictions in effect during the quarter. Net of aberrations, taxable sales for all of San Diego County grew 7.4% over the comparable time period; the Southern California region was up 9.0%. TOTAL:$ 3,533,620 15.6% 7.4% 9.5% COUNTY STATE ENCINITAS 1Q2021 TOP NON-CONFIDENTIAL BUSINESS TYPES Q1 '21* EncinitasBusiness Type Change Change ChangeCountyHdL State -4.0%-1.5%7.3% 272.3 Service Stations -18.9%-18.3%-15.1% 211.3 Casual Dining -6.2%-6.2%-5.9% 153.9 Grocery Stores 1.1%2.7%3.3% 149.6 Quick-Service Restaurants 33.3%45.8%63.6% 146.3 Sporting Goods/Bike Stores 19.3%17.1%31.6% 110.5 Home Furnishings 1.1%-1.9%1.9% 91.6 Fast-Casual Restaurants 11.1%12.6%33.0% 87.9 Convenience Stores/Liquor 9.0%-2.6%6.0% 72.2 Electronics/Appliance Stores -1.1%-3.8%-7.7% 71.3 Auto Lease *Allocation aberrations have been adjusted to reflect sales activity *In thousands of dollars REVENUE BY BUSINESS GROUP Encinitas This Quarter* 8% Fuel 20% Pools 14% Restaurants 14% Autos/Trans. 8% Building 3% Bus./Ind. 25% Cons.Goods 8% Food/Drug *ADJUSTED FORECONOMIC DATA SALES TAX UPDATECITY OF ENCINITAS1Q 2021 STATEWIDE RESULTS The local one cent sales and use tax from sales occurring January through March, was 9.5% higher than the same quarter one year ago after factoring for accounting anomalies and back payments from previous quarters. The Shelter-In-Place directive began one year ago which had the impact of immediate store and restaurant closures combined with remote/work from home options for employees which significantly reduced commuting traffic and fuel sales. When comparing to current period data, percentage gains are more dramatic. Furthermore, this pandemic dynamic combined with the Governor’s first Executive Order of last spring allowing for deferral of sales tax remittances explained why non-adjusted cash results were actually up 33%. These initial recovery gains were not the same everywhere. Inland regions like Sacramento, San Joaquin Valley, Sierras, Far North and the Inland Empire area of Southern California performed much stronger than the Bay Area, Central Coast and metro areas of Southern California. Within the results, solid performance by the auto-transportation and building- construction industries really helped push receipts higher. Weak inventories and scarcity for products increased the taxable price of vehicles (new & used), RV’s, boats and lumber which appeared to be a major driving force for these improved returns. Even though e-commerce sales activity continued to rise, brick and mortar general consumer retailers also showed solid improvement of 11% statewide. An expected change occurred this quarter as a portion of use tax dollars previously distributed through the countywide pools was redirected to specific local jurisdictions. Changes in business structure required a taxpayer to determine where merchandise was inventoried at the time orders were made. Therefore, rather than apportion sales to the county pool representing where the merchandise was shipped, goods held in California facilities required allocations be made to the agency where the warehouse resides. With this modification, the business and industry category jumped 18% inclusive of steady gains by fulfillment centers, medical- biotech and garden-agricultural suppliers. Even after the change noted, county pools surged 18% which demonstrated consumers continued desire to make purchases online. Although indoor dining was available in many counties, the recovery for restaurants and hotels still lagged other major categories. Similarly, while commuters and travelers slowly began returning to the road, the rebound for gas stations and jet fuel is trailing as well. Both sectors are expected to see revenues climb in the coming quarters as commuters and summer tourism heats up. Looking ahead, sustained growth is anticipated through the end of the 2021 calendar year. As a mild head wind, pent up demand for travel and experiences may begin shifting consumer dollars away from taxable goods; this behavior modification could have a positive outcome for tourist areas within the state.