HdL Sales Tax Report for CY2018 Q3 SalesSales Tax Update
In Brief
Top 25 producers
In AlphAbetIcAl Order
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Q32018
Encinitas
Encinitas’s receipts from July
through September were 28.0%
above the third sales period in 2017.
Excluding reporting aberrations, ac-
tual sales were up 4.6%.The CDTFA has resolved the bulk
of outstanding payments that result-
ed from the State’s software conver-
sion. These multi-quarter adjust-
ments temporarily spiked returns in
all business groups and triggered
the surge in the countywide use tax
allocation pool.Once double disbursements were
removed, general retail dipped
0.6%. While family apparel and
shoe stores posted growth, most
other sectors dipped compared to a
year ago.The 3.4% rise in restaurants on an
actual basis was due to a report-
ing error in the fast-casual restau-
rant category. Otherwise, this group
lagged regional trends.Higher fuel prices contributed to
the impressive jump in service sta-
tions while construction and auto-re-
lated sectors reflected positive eco-
nomic activity on an adjusted basis.Net of aberrations, taxable sales
for all of San Diego County grew
3.7% over the comparable time pe-
riod; the Southern California region
was up 4.3%.
City of Encinitas
Fourth Quarter Receipts for Third Quarter Sales (July - September 2018)
Published by HdL Companies in Winter 2019
7 Eleven
76
Best Buy
BMW of Encinitas
Cardiff Seaside Market
Chevron
Encinitas Ford
Encinitas Gasoline & Auto Service
Financial Services Vehicle Trust
Hansen Surfboards
Herman Cook Volkswagen
Home Depot
Home Goods
Pacific Coast Grill
Quick Shine Car Wash
RCP Block & Brick
REI
Ross
Shell
Shell Car Wash At Encinitas Ranch
Target
Trader Joes
Valero
Vons
Walmart Supercenter
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
SALES TAX BY MAJOR BUSINESS GROUP
3rd Quarter 2017
3rd Quarter 2018
General
Consumer
Goods
Restaurants
and
Hotels
Fuel and
Service
Stations
County
and State
Pools
Autos
and
Transportation
Building
and
Construction
Food
and
Drugs
Business
and
Industry
$4,330,607 $3,382,095
1,956 2,325
565,688 436,318
$3,762,963 $2,943,453
2018-192017-18
Point-of-Sale
County Pool
State Pool
Gross Receipts
REVENUE COMPARISON
One Quarter – Fiscal Year To Date (Q3)
NOTESSales Tax UpdateQ3 2018 City of Encinitas
$0
$2,000
$4,000
$6,000
$8,000
SALES PER CAPITA
Encinitas
Q3
15
Q3
18
Q3
16
Q3
17
County California
25%
Cons.Goods
17%
Restaurants
13%
Fuel
13%
Pools
11%
Autos/Trans.
9%
Building
7%5% Food/DrugBus./Ind.
Encinitas This QuarterREVENUE BY BUSINESS GROUP
Q3 '18*
Encinitas
ENCINITAS TOP 15 BUSINESS TYPES
Business Type Change Change Change
County HdL State*In thousands of dollars
3.6%43.4%31.8% 67.9 Auto Lease — CONFIDENTIAL —
43.3%29.8%29.6% 294.6 Building Materials — CONFIDENTIAL —
14.0%14.9%11.8% 344.5 Casual Dining
12.3%20.3%22.5% 76.1 Convenience Stores/Liquor
28.3%18.3%17.1% 279.8 Discount Dept Stores — CONFIDENTIAL —
17.8%12.7%18.3% 109.6 Electronics/Appliance Stores
37.5%36.3%34.3% 109.3 Family Apparel
54.9%15.2%14.4% 142.5 Fast-Casual Restaurants
27.5%16.1%9.6% 198.8 Grocery Stores
12.2%23.1%17.8% 139.7 Home Furnishings
5.5%12.7%3.9% 275.1 New Motor Vehicle Dealers — CONFIDENTIAL —
20.7%13.5%17.2% 201.4 Quick-Service Restaurants
78.8%43.1%50.1% 571.9 Service Stations
2.4%8.5%1.6% 68.8 Specialty Stores
33.9%21.1%17.6% 201.7 Sporting Goods/Bike Stores
21.8%21.1%27.8%
29.4%
28.0%
3,763.0
567.6
4,330.6
Total All Accounts
County & State Pool Allocation
Gross Receipts
22.6%27.8%
21.3%22.6%
California Overall
The CDTFA’s problems with its new
software system had yet to be fully re-
solved by the end of the third quarter.
HdL’s adjustments for delayed payments
and other reporting deficiencies indicate
that statewide receipts from the local one
cent tax rose 5.2% over the first three
quarters of 2018 versus the comparison
period. The gains were primarily from
higher fuel prices, strong building-con-
struction activity and a rise in tax re-
ceipts from online purchases delivered
from out-of-state that are shared by all
agencies via the county pools.
The data exhibits the start of a leveling
pattern in other sectors. The statewide
gain in new car sales for July through
September was due to a single manufac-
turer filling back orders. Price compe-
tition kept tax revenues from consumer
goods receipts relatively flat while the
rise in online shopping is expanding the
diversion of tax revenues from brick and
mortar stores to county pools or to in-
state distribution centers.
Restaurant sales are beginning to show
signs of market saturation as well as the
impact of new competition that includes
- prepared food and meal kits delivered
from a variety of other sources. A mod-
est gain in business-industrial sales was
largely related to data and warehouse
technology as well as a few major de-
velopment projects.
Anticipated declines in fuel prices in
the first quarter of 2019 adds support
to HdL’s latest consensus forecast for a
modest statewide gain of 1.5% in fiscal
year 2019-20 unless new trade conflicts
further impact the economy.
South Dakota V. Wayfair Decision
In June, the Supreme Court reversed
its previous ruling that retailers are not
required to collect taxes for jurisdictions
where they have no physical presence or
“nexus.” Instead, the buyer was respon-
sible for remitting the tax.
California will begin enforcing the
Wayfair reversal effective April 1, 2019
by making retailers delivering from
out-of-state responsible for collecting
and remitting use tax if calendar year
sales exceed $100,000 and/or 200 or
more separate transactions. The same
threshold will also determine whether
in-state retailers are responsible for col-
lecting taxes on deliveries to individual
transactions tax districts.
Some legislators have announced their
intention to hold hearings and may
modify the regulations prior to the an-
nounced April 1 implementation date.
That process and anticipated start-up
and notification issues will probably
delay full compliance in 2019-20.
As most major online retailers, including
Wayfair, are already collecting Califor-
nia taxes and the state has traditionally
enforced a broad definition of “nexus,”
the impact of the South Dakota decision
may be less than in other states. The
U.S. Government Accountability Office
estimates a potential eventual gain of $3
to $5 per capita in receipts from our one
cent local tax.