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HdL Sales Tax Report for CY2021 Q3 Saleswww.hdlcompanies.com | 888.861.0220 Q3 2020* Q3 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 Restaurants and Hotels Autos and Transportation Fuel and Service Stations Building and Construction Food and Drugs Business and Industry TOP 25 PRODUCERSCITY OF ENCINITAS HIGHLIGHTS Published by HdL Companies in Winter 2022 SALES TAX UPDATE CITY OF ENCINITAS 3Q 2021 (JULY - SEPTEMBER) 7 Eleven 76 Alila Marea Beach Resort Best Buy BMW of Encinitas Cardiff Seaside Market Chevron Dick’s Sporting Goods Encinitas Ford Financial Services Vehicle Trust Hansen Surfboards Herman Cook Volkswagen Home Depot Home Goods Pacific Coast Grill Quick Shine Car Wash REI Scotty Cameron Gallery Shell Shell Car Wash At Encinitas Ranch Target TJ Maxx Valero Vons Walmart Supercenter Encinitas’ receipts from July through September were 10.0% above the third sales period in 2020. Excluding reporting aberrations, actual sales were up 12.5%. Casual dining and other hotel and restaurant related receipts increased 35% compared to last year, a time when many eateries were closed for indoor seating. This year, many newly vaccinated consumers were eager to leave the house, travel and dine out again. New business openings further lifted the category. Tax proceeds from local service stations surged 59% as the price of gasoline surged above $4.50 per gallon and as consumers drove more than they did last year during the lockdown. Auto and transportation related revenue was also strong. Sporting goods, specialty stores and other general consumer goods retailers benefited by consumers spending more of their paycheck on tangible goods this year, rather than on services, compared to before the Covid-19 crisis. A recent store opening was also positive, but a payment error suppressed the overall rate of growth. Allocations from the countywide use tax pool were lower than normal, reduced in part by a recent taxpayer reporting change. Net of aberrations, taxable sales for all of San Diego County grew 18.2% over the comparable time period; the Southern California region was up 19.9%. TOTAL:$ 4,265,687 12.5% 18.2% 18.2% COUNTY STATE ENCINITAS 3Q2021 TOP NON-CONFIDENTIAL BUSINESS TYPES Q3 '21* EncinitasBusiness Type Change Change ChangeCountyHdL State 53.4%54.8%59.4% 383.3 Service Stations 68.4%66.9%49.4% 343.2 Casual Dining 2.2%4.7%25.9% 193.8 Sporting Goods/Bike Stores 13.5%16.4%7.1% 178.8 Quick-Service Restaurants -0.2%-0.3%-5.5% 164.2 Grocery Stores 11.0%5.7%14.5% 127.2 Home Furnishings 18.8%23.0%16.4% 118.7 Fast-Casual Restaurants 21.4%18.2%38.0% 97.1 Specialty Stores 39.0%33.9%30.2% 89.0 Family Apparel -0.2%-1.7%-7.3% 86.7 Convenience Stores/Liquor *Allocation aberrations have been adjusted to reflect sales activity *In thousands of dollars $0 $2,000 $4,000 $6,000 $8,000 Encinitas Q3 18 Q3 21 Q3 19 Q3 20 County California SALES PER CAPITA* *ADJUSTED FORECONOMIC DATA SALES TAX UPDATECITY OF ENCINITAS3Q 2021 STATEWIDE RESULTS Local one cent sales and use tax receipts for sales occurring July through September were 18% higher than the same quarter one year ago after adjusting for accounting anomalies and back payments from previous quarters. These aberrations had been much greater than normal in the last two years as the Governor’s Executive Orders allowed businesses to defer some sales tax payments as a supportive measure during the pandemic. This program has now expired, and merchant remittances are more consistent, making cash receipts more reflective of underlying economic activity. The prior year comparison quarter was the start of the pandemic recovery, and the strong growth enjoyed since continued with the recent results. Surprisingly, one of the stronger sectors has been restaurants and hotels. Originally forecasted to take an extended amount of time to recover, statewide sales tax generated during the summer months exceeded amounts from pre-pandemic 2019. Even with the availability of indoor and outdoor dining, pent up demand resulted in long wait times to enjoy local culinary experiences. When combined with increasing restaurant tabs as the cost of food and staff wages surge, sales tax remittances are expected to continue growing. Additionally, while the industry awaits the return of foreign tourism in metropolitan areas, strong domestic travel has helped varied regions around the state especially Southern California and the Central Coast. Receipts from general consumer goods marked a steady recovery, led by apparel retailers, jewelry, electronic/appliance and specialty outlets. Discount department stores, especially those selling gas, helped exemplify the strength of brick-and-mortar merchants. Gains from the countywide use tax pools however, slowed to 2% compared to the high-water mark last year, which had been boosted by new tax collecting requirements imposed under AB 147 for online retailers. All things considered, when combined with positive economic trends, these are a welcome sign leading up to the holiday shopping period. Although car dealers had expressed concerns about inventory shortages due to supply chain disruptions and computer chip shortages earlier in the year, the sale of new and used vehicles posted solid gains regardless. Higher property values and good weather contributed to strong building materials and contractor returns. As commuting workers and travelers returned to the road with increased gas prices, fuel and service stations also experienced a dramatic recovery. Overall growth is expected to continue through the end of the 2021 calendar year. Possible headwinds into 2022 include: pent up demand for travel and experiences shifting spending away from taxable goods; higher prices for fuel, merchandise and services displacing more of consumer’s disposable income; and expected interest rate hikes resulting in more costly financing for automobiles, homes, and consumer loans.