HdL Sales Tax Report for CY2019 Q1 SalesSales Tax Update
In Brief
Top 25 producers
In AlphAbetIcAl Order
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Q12019
Encinitas
Encinitas’s receipts from January
through March were 11.2% above
the first sales period in 2018 though
results were inflated by irregularities
in the timing of local revenue allo-
cations following the State’s recent
transition to a new software system.
Auto leasing firms, service stations,
grocery stores and allocations from
the countywide use tax pool were
particularly impacted. Adjusted for
proper payment timing, results were
down 1.9%.The largest negative factor was
poor results for home furnishing
outlets, electronics-appliance stores
and several other general consum-
er good categories, as shopping ac-
tivity continues to migrate to online
retailers.Service station receipts were also
down as prices have recently mod-
erated from recent highs.Net of aberrations, taxable sales
for all of San Diego County grew
0.9% over the comparable time pe-
riod; the Southern California region
was up 0.9%.
City of Encinitas
Second Quarter Receipts for First Quarter Sales (January - March 2019)
Published by HdL Companies in Summer 2019
7 Eleven
76
Best Buy
BMW of Encinitas
Cab West/Volvo Leasing
Chevron
Dick’s Sporting Goods
Encinitas Ford
Financial Services Vehicle Trust
Hansen Surfboards
Herman Cook Volkswagen
Home Depot
Home Goods
Pacific Coast Grill
REI
Scotty Cameron Gallery
Shell
Shell Car Wash At Encinitas Ranch
Target
TJ Maxx
Trader Joes
Valero
Verizon Wireless
Vons
Walmart Supercenter
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
SALES TAX BY MAJOR BUSINESS GROUP
1st Quarter 2018
1st Quarter 2019
General
Consumer
Goods
Restaurants
and
Hotels
County
and State
Pools
Autos
and
Transportation
Fuel and
Service
Stations
Food
and
Drugs
Building
and
Construction
Business
and
Industry
$11,240,876 $9,941,728
5,112 5,481
1,517,878 1,303,718
$9,717,886 $8,632,530
2018-192017-18
Point-of-Sale
County Pool
State Pool
Gross Receipts
REVENUE COMPARISON
Three Quarters – Fiscal Year To Date (Q3 to Q1)
NOTESSales Tax UpdateQ1 2019 City of Encinitas
$0
$2,000
$4,000
$6,000
$8,000
SALES PER CAPITA
Encinitas
Q1
16
Q1
19
Q1
17
Q1
18
County California
25%
Cons.Goods
18%Restaurants
14%Pools
13%Autos/Trans.
10%
Fuel
8%Food/Drug8% Building
Bus./Ind.
Encinitas This QuarterREVENUE BY BUSINESS GROUP
4%
Q1 '19*
Encinitas
ENCINITAS TOP 15 BUSINESS TYPES
Business Type Change Change Change
County HdL State*In thousands of dollars
na na na 95.2 Auto Lease — CONFIDENTIAL —
1.3%4.0%6.0% 193.3 Building Materials — CONFIDENTIAL —
6.5%13.3%12.1% 279.7 Casual Dining
17.2%16.2%13.2% 67.2 Convenience Stores/Liquor
-10.9%2.9%0.4% 180.7 Discount Dept Stores — CONFIDENTIAL —
13.4%-3.2%2.1% 104.2 Electronics/Appliance Stores
16.9%7.1%6.5% 90.8 Family Apparel
5.9%8.7%6.5% 104.2 Fast-Casual Restaurants
27.5%25.7%34.8% 148.3 Grocery Stores
-9.3%3.5%1.0% 108.1 Home Furnishings
-3.4%-1.8%2.0% 239.3 New Motor Vehicle Dealers — CONFIDENTIAL —
6.6%10.1%12.2% 153.8 Quick-Service Restaurants
8.0%15.8%22.2% 325.4 Service Stations
18.9%23.4%27.3% 61.1 Specialty Stores
18.1%2.7%-4.6% 126.3 Sporting Goods/Bike Stores
13.5%14.8%10.0%
19.0%
11.2%
2,814.9
475.2
3,290.1
Total All Accounts
County & State Pool Allocation
Gross Receipts
24.2%23.8%
16.0%14.9%
Statewide Results
Local sales and use tax receipts from
January through March sales were 1.0%
higher than the first quarter of 2018
after factoring out accounting anoma-
lies and back payments from previous
state reporting shortfalls. This was the
lowest percentage increase since first
quarter, 2010.
The growth came primarily from a
solid quarter for purchases related to
expanding logistics, medical and tech-
nology facilities and modest gains in
building-construction supplies and
restaurants. Cannabis sales produced
a slight uptick in the food-drug group.
Lower fuel prices and declining gener-
al consumer good purchases offset the
gains. The shift to internet purchases
continued with online shopping ac-
counting for 22.3% of the total general
consumer goods segment versus 20.2%
one year ago. Tax receipts from new
car sales exhibited significant reductions
although the drop was partially offset
by an upswing in used autos and auto
leases.
Regional changes ranged from a de-
cline of 2.1% to gains as high as 4.4%.
However, the differences were primar-
ily attributable to onetime projects or
capital purchases and not reflective of
overall economic trends.
Slower Growth Ahead?
July marks ten years of continuous
economic growth which is the longest
period of U.S. economic expansion on
record. However, analysts from a vari-
ety of economic segments are reporting
signs that we may be leveling off.
This quarter marked the eighth consecu-
tive comparative period decline in Cali-
fornia new car registrations with analysts
noting that higher prices and a growing
supply of vehicles coming off lease are
making used cars more attractive. They
also note that on-demand services such
as Uber and Lyft are making it easier
for debt-burdened millennials to avoid
buying cars altogether.
Rising restaurant menu prices, renewed
competition from grocer prepared
meals, and cutbacks in foreign tourism
appear to be reducing restaurant patron-
age which in recent years was one of the
state’s fastest growth segments. There
will be an uptick in the second quar-
ter’s fuel-related tax receipts because of
that period’s refinery shutdowns; lower
crude oil costs are expected to produce
subsequent declines.
Uncertainty over U.S. tariff and trade
policies plus labor shortages are delaying
some investment and business expansion
decisions while reduced home sales and
two quarters of declining construction
permit values suggest a potential future
leveling in that sector. Investment in
technological advances should continue
and remain strong.
Economic shifts are not the only fac-
tor leveling sales tax revenues. With an
economy based on intellectual technol-
ogy rather than goods and consumer
priorities shifting to non-taxable services
and experiences, sales tax no longer re-
flects 21st century spending. Each year
therefore, the portion of the economy
that is taxed, shrinks.