HdL Sales Tax Report for CY2017 Q3 SalesSales Tax Update
In Brief
Top 25 producers
In AlphAbetIcAl Order
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Q32017
Encinitas
Encinitas’ receipts from July
through September were 3.2%
above the third sales period in 2016. Progress was widespread among
multiple categories. General con-
sumer good sales benefited from
the recent opening of a new sporting
goods retailer. The return of higher
gasoline prices at the pump lifted
service stations. Auto-transportation
sector sales also grew.Business-industrial sales were
higher, but the gain was exagger-
ated by the write-off of a consumer
bad-debt expense in the prior com-
parison year.Restaurant-hotel sales were
mixed. The recent opening of sever-
al creative new concept restaurants
propelled fast-casual results, how-
ever casual dining sales declined.
This category has been squeezed
within the industry as an explosion
of new options have been made
available to diners who increasing-
ly prefer to eat either upmarket, or
inexpensively.Net of aberrations, taxable sales
for all of San Diego County grew
2.1% over the comparable time pe-
riod; the Southern California region
was up 3.1%.
City of Encinitas
Fourth Quarter Receipts for Third Quarter Sales (July - September 2017)
Published by HdL Companies in Winter 2018
7 Eleven
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
Rosanos Unocal 76
Ross
Shell Gas & Car Wash
Target
TJ Maxx
Trader Joes
USA Gasoline
Valero
Vons
Walmart Supercenter
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
SALES TAX BY MAJOR BUSINESS GROUP
3rd Quarter 2016
3rd Quarter 2017
General
Consumer
Goods
Restaurants
and
Hotels
County
and State
Pools
Autos
and
Transportation
Fuel and
Service
Stations
Building
and
Construction
Food
and
Drugs
Business
and
Industry
$6,679,710 $6,390,826
807 1,941
834,994 820,198
$5,843,909 $5,568,686
2017-182016-17
Point-of-Sale
County Pool
State Pool
Gross Receipts
REVENUE COMPARISON
Two Quarters – Fiscal Year To Date
NOTESSales Tax UpdateQ3 2017 City of Encinitas
$0
$1,000
$2,000
$3,000
$4,000
SALES PER CAPITA
Encinitas
Q3
14
Q3
17
Q3
15
Q3
16
County California
26%
Cons.Goods
18%
Restaurants
13%
Pools
13%
Autos/Trans.
10%
Fuel
8%
Building
8%
Food/Drug5%
Bus./Ind.
Encinitas This QuarterREVENUE BY BUSINESS GROUP
Q3 '17*
Encinitas
ENCINITAS TOP 15 BUSINESS TYPES
Business Type Change Change Change
County HdL State*In thousands of dollars
15.6%4.6%6.1% 65.6 Auto Lease — CONFIDENTIAL —
-6.0%5.6%2.3% 204.9 Building Materials — CONFIDENTIAL —
-10.6%2.2%-0.4% 291.3 Casual Dining
3.1%7.8%6.4% 63.9 Convenience Stores/Liquor
2.3%6.1%5.4% 218.1 Discount Dept Stores — CONFIDENTIAL —
-3.5%0.3%-4.8% 92.6 Electronics/Appliance Stores
-0.9%1.7%3.0% 79.4 Family Apparel
41.3%8.6%6.9% 89.5 Fast-Casual Restaurants
2.8%0.6%0.6% 155.9 Grocery Stores
8.4%0.6%1.7% 123.3 Home Furnishings
5.8%0.9%1.8% 260.8 New Motor Vehicle Dealers — CONFIDENTIAL —
-3.6%4.8%4.6% 168.2 Quick-Service Restaurants
6.2%9.2%8.0% 323.6 Service Stations
3.1%2.3%0.8% 66.1 Specialty Stores
20.1%-9.8%-7.3% 147.0 Sporting Goods/Bike Stores
4.1%2.5%3.0%
4.5%
3.2%
2,943.5
438.6
3,382.1
Total All Accounts
County & State Pool Allocation
Gross Receipts
3.9%4.8%
2.7%4.2%
Statewide Trends
After factoring for accounting anoma-
lies, local government’s one-cent share
of statewide sales and use tax from July
through September sales was 3.6% high-
er than 2016’s summer quarter.
Rising fuel prices, increased demand
for building-construction materials and
the continuing acceleration in online
shopping for merchandise shipped from
out-of-state that is expanding receipts
from the countywide use tax allocation
pools were the primary contributors to
the overall increase.
This quarter marked the anticipated
leveling off of auto sales while agri-
culture and transit-related purchases
helped boost otherwise tepid gains in
business-industrial receipts. Restaurant
sales exhibited healthy overall gains of
3.5% although growth rates are slowing
from previous quarters.
Receipts from consumer goods sold by
brick and mortar stores were up 0.7%
over the previous year while revenues
from online purchases grew 13.3%.
Cannabis Taxation
A 15% excise tax on retail cannabis and
cannabis products along with a cultiva-
tion tax and sales tax on recreational uses
take effect on January 1, 2018.
Significant sales tax revenues are not
expected until late 2018-19 as retail
start-ups comply with lengthy state and
local permitting processes. Although
sales of medicinal cannabis became
exempt in 2016 for purchasers with a
state issued Medical Marijuana ID card,
jurisdictions with dispensaries continue
to receive sales tax from that source as
most patients prefer to use a note from
their physicians.
Some decline in revenues from medi-
cal dispensaries are expected as users’
transition to new purchase options
and because of lower prices caused by
anticipated overproduction and the six
month window that suppliers have to sell
existing inventory grown under previous
regulations.
Sales Tax and Natural Disasters
The recent firestorm tragedies have
raised questions on potential bumps in
sales tax revenues from reconstruction
and recovery activities.
HdL analyzed the sales tax data from
the 1991 Oakland Hills, 2003 San Di-
ego Cedar and 2007 San Diego Witch
fires which involved the combined loss
of over 7,700 structures. Surprising-
ly, there were no identifiable gains in
construction and auto-related purchases
within the impacted areas during the
five years after each event with receipts
following normal economic cycles ex-
perienced by the state as a whole.
Further analysis suggests that though
the individual losses are catastrophic,
purchases of replacement items are a
small fraction of the impacted area’s
total spending and is often spread to
other jurisdictions where disaster victims
relocate. Tax receipts from construction
spending are defused over time because
of lengthy claims and permitting pro-
cesses that cause up to 40% of disaster
victims to relocate leaving vacant lots
that are not immediately redeveloped.