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HdL Sales Tax Report for CY2019 Q2 SalesSales Tax Update In Brief Top 25 producers In AlphAbetIcAl Order www.hdlcompanies.com | 888.861.0220 Q22019 Encinitas Encinitas’ receipts from April through June were 28.7% above the second sales period in 2018. However, this comparison is inflated due to CDTFA’s transition to a new reporting system. Excluding report- ing aberrations, actual sales were up 0.5%.The rise in the countywide use tax allocation pool offset the decline in most industry groups on an actu- al basis. In addition, new eateries contributed to the 2.6% increase in restaurants.Once adjusted, general retail slipped 4.8%. Most sectors were lower than a year ago with the ex- ception of men’s apparel. Multiple year-ago state-related dis- bursement issues accounted for the decrease in autos and transporta- tion. A recent opening pushed up actual results by 1.1%.Net of aberrations, taxable receipts for all of San Diego County grew 1.4% over the comparable time pe- riod; the Southern California region was up 2.6%. City of Encinitas Third Quarter Receipts for Second Quarter Sales (April - June 2019) Published by HdL Companies in Fall 2019 7 Eleven 76 Best Buy BMW of Encinitas Cardiff Seaside Market Chevron Dick’s Sporting Goods 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 REI Shell Shell Car Wash At Encinitas Ranch Target TJ Maxx USA Gasoline Valero Vons Walmart Supercenter $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 SALES TAX BY MAJOR BUSINESS GROUP 2nd Quarter 2018 2nd 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 $14,709,987 $12,636,481 6,413 6,363 2,021,121 1,682,024 $12,682,452 $10,948,094 2018-192017-18 Point-of-Sale County Pool State Pool Gross Receipts REVENUE COMPARISON Four Quarters – Fiscal Year To Date (Q3 to Q2) NOTESSales Tax UpdateQ2 2019 City of Encinitas $0 $2,000 $4,000 $6,000 $8,000 SALES PER CAPITA Encinitas Q2 16 Q2 19 Q2 17 Q2 18 County California 25% Cons.Goods 19%Restaurants 15%Pools 13% Autos/Trans. 10%Fuel 8%Food/Drug7% BuildingBus./Ind. Encinitas This QuarterREVENUE BY BUSINESS GROUP 5% Q2 '19* Encinitas ENCINITAS TOP 15 BUSINESS TYPES Business Type Change Change Change County HdL State*In thousands of dollars -52.0%-48.7%-48.0% 72.9 Auto Lease — CONFIDENTIAL — 78.4%34.1%25.3% 182.8 Building Materials — CONFIDENTIAL — 33.1%24.5%21.1% 322.9 Casual Dining 6.1%14.9%12.4% 71.5 Convenience Stores/Liquor 36.6%26.3%22.5% 198.2 Discount Dept Stores — CONFIDENTIAL — -28.1%7.0%-4.4% 70.6 Electronics/Appliance Stores 31.7%45.3%50.0% 85.9 Family Apparel 12.4%18.9%19.1% 105.7 Fast-Casual Restaurants 14.6%9.6%3.0% 155.0 Grocery Stores 0.9%15.8%15.5% 110.5 Home Furnishings 3.1%5.4%4.7% 268.6 New Motor Vehicle Dealers — CONFIDENTIAL — 25.2%15.9%15.4% 176.4 Quick-Service Restaurants 286.2%51.4%46.0% 333.5 Service Stations -8.3%-8.5%-14.4% 61.0 Specialty Stores 151.6%29.7%30.6% 131.1 Sporting Goods/Bike Stores 20.1%16.9%28.0% 33.1% 28.7% 2,964.6 504.5 3,469.1 Total All Accounts County & State Pool Allocation Gross Receipts 21.5%22.4% 17.5%20.4% California Overall The local one percent share of Cal- ifornia’s sales and use tax from April through June sales was 20.4% higher than the same quarter of 2018. How- ever, the actual gain came to 2.9% after factoring for online filing issues and ac- counting anomalies. Fiscal year 2018-19 ended with an increase of 3.6% over the previous year after similarly adjusting for reporting aberrations. The quarter exhibited continuation of a recent softening for most taxable categories. Rising used car sales and rentals helped offset what was other- wise, a generally flat quarter for the auto-transportation group. An accel- eration in online shopping boosted receipts from county wide pools while gains for brick and mortar stores were limited to value priced apparel, discount department stores and jewelry. Restaurant patronage appears to be leveling with a shift toward lower cost dining options that produced relative- ly modest gains for the group when compared to previous quarters. New cannabis operations resulted in a small rise in food and drug receipts. A 2.5% gain in business-industrial sales and use tax revenues came primarily from online fulfillment centers, logis- tics and utility company purchases and ongoing investment in automation and information technology. A similar rise in receipts from the building-construc- tion group was due to a variety of infra- structure and onetime special projects that offset declines in material purchases for new home construction. Marketplace Facilitator Act Effective Oct. 1, 2019, companies such as Amazon, eBay and Google who pro- vide sales tax related services to other retailers are required to assume the obli- gation for collecting and remitting their client’s sales and use tax. The definition of sales-related services includes payment processing, inventory and shipping of merchandise, order taking, providing customer service, or assisting with re- turns and exchanges. The Marketplace provision was part of AB 147 which was adopted to imple- ment California’s approach to the U.S. Supreme Court decision in South Da- kota v. Wayfair Inc. AB 147 requires out-of-state retailers with annual combined sales of $500,000 or more to now collect and remit this state’s sales and use tax from its custom- ers. Applying the $500,000 threshold to the sum total of all the third-party trans- actions that facilitators process for their clients, is hoped to produce moderate gains in previously uncollected revenues for the state, cities, counties and local transaction tax districts. Facilitator tax remittances from mer- chandise inventoried in California will be allocated to specific jurisdictions while receipts from deliveries outside of the state will be distributed via the pools. Some facilitators have begun to collect and remit taxes ahead of this deadline. This is evidenced by new pool alloca- tions and increases in direct allocations to certain jurisdictions.