HdL Sales Tax Report for CY2018 Q2 SalesSales Tax Update
In Brief
Top 25 producers
In AlphAbetIcAl Order
www.hdlcompanies.com | 888.861.0220
Q22018
Encinitas
Encinitas’ receipts from April
through June were 18.3% below the
second sales period in 2017 though
the decline was largely the result
of the State’s transition to a new
software and reporting system that
caused a delay in processing thou-
sands of payments statewide. Siz-
able local allocations remain out-
standing, particularly for service
stations, casual dining eateries,
building and construction suppliers,
sporting goods and bike stores and
other categories of general consum-
er goods. Excluding reporting ab-
errations, actuals sales were down
0.6%.Auto and transportation receipts
were higher but reported growth
was inflated by catch-up payments
from last quarter. The allocations
had been delayed by the same soft-
ware issue that impacted this quar-
ter’s results.Economic growth was relatively flat
overall after adjusting for payment
anomalies due primarily to low-
er real casual dining and sporting
good and bike store receipts that re-
strained the overall rate of progress.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 1.0%.
City of Encinitas
Third Quarter Receipts for Second Quarter Sales (April - June 2018)
Published by HdL Companies in Fall 2018
Best Buy
BevMo
BMW of Encinitas
Buy Buy Baby
Cab West/Volvo Leasing
Dick’s Sporting Goods
Encinitas Ford
Financial Services Vehicle Trust
Herman Cook Volkswagen
Home Depot
Home Goods
Kohls
Lazy Acres
Pacific Coast Grill
Petco
Ralphs
Smart & Final
Target
TJ Maxx
Trader Joes
USA Gasoline
Valero
Verizon Wireless
Vons
Walmart Supercenter
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
SALES TAX BY MAJOR BUSINESS GROUP
2nd Quarter 2017
2nd Quarter 2018
General
Consumer
Goods
Restaurants
and
Hotels
Autos
and
Transportation
County
and State
Pools
Food
and
Drugs
Building
and
Construction
Business
and
Industry
Fuel and
Service
Stations
$12,636,481 $13,097,176
6,363 6,340
1,682,024 1,749,527
$10,948,094 $11,341,310
2017-182016-17
Point-of-Sale
County Pool
State Pool
Gross Receipts
REVENUE COMPARISON
Four Quarters – Fiscal Year To Date (Q3 to Q2)
NOTESSales Tax UpdateQ2 2018 City of Encinitas
$0
$1,000
$2,000
$3,000
$4,000
SALES PER CAPITA
Encinitas
Q2
15
Q2
18
Q2
16
Q2
17
County California
25%
Cons.Goods
19%
Restaurants
19%
Autos/Trans.
14%
Pools
9%
Food/Drug
8%
Others6%
Building
Encinitas This QuarterREVENUE BY BUSINESS GROUP
Q2 '18*
Encinitas
ENCINITAS TOP 15 BUSINESS TYPES
Business Type Change Change Change
County HdL State*In thousands of dollars
160.3%60.9%67.8% 151.8 Auto Lease — CONFIDENTIAL —
-45.9%-23.2%-25.3% 102.5 Building Materials — CONFIDENTIAL —
-19.1%-12.6%-9.6% 242.3 Casual Dining
-5.3%-9.2%-4.4% 64.7 Convenience Stores/Liquor
-30.0%-13.5%-12.0% 145.1 Discount Dept Stores — CONFIDENTIAL —
-11.2%-5.1%-3.1% 98.1 Electronics/Appliance Stores
-25.3%-27.2%-28.5% 65.2 Family Apparel
13.0%-3.3%-6.3% 91.0 Fast-Casual Restaurants
-12.4%-7.0%-2.1% 135.3 Grocery Stores
-9.4%-21.7%-20.2% 109.6 Home Furnishings
0.1%-1.9%-5.9% 260.6 New Motor Vehicle Dealers — CONFIDENTIAL —
-13.0%-5.8%-5.2% 143.9 Quick-Service Restaurants
-71.6%-26.4%-31.9% 89.1 Service Stations
-3.8%-4.6%3.9% 66.5 Specialty Stores
-62.8%-20.9%-22.3% 51.9 Sporting Goods/Bike Stores
-12.2%-12.3%-20.2%
-4.5%
-18.3%
2,315.6
379.2
2,694.8
Total All Accounts
County & State Pool Allocation
Gross Receipts
4.9%5.5%
-10.3%-10.1%
California Overall
Local Government cash receipts from
April through June sales dropped
10.1% from the same quarter one year
ago due to implementation issues with
CDFTA’s new tax reporting software
system. The results were further
skewed by the State’s attempt to offset
the resulting shortages by advancing
tax revenues that it estimates will be
generated next quarter.
After reviewing unprocessed returns
and approximating the full amounts of
partial payments, HdL estimates that
once all returns are properly processed
and the data adjusted to reflect actual
quarter receipts, statewide local sales
and use tax revenues will be 1.6%
higher than second quarter 2017.
Sales of building and construction
materials, jet fuel and online shop-
ping appear to have been the primary
drivers of statewide growth during the
second quarter. Auto sales leveled off
as previously anticipated, although
receipts from auto leases continued
to show substantial gains. Online
fulfillment centers and value themed
apparel stores were the primary gainers
within the general consumer goods
group. Business-industrial purchases
were slightly lower than previous
quarters with declines in new energy
projects being a major factor.
Regionally, the San Francisco Bay area
and the Sacramento and San Joaquin
Valley areas outperformed the rest of
the state.
Tariff Policies and Sales Tax
Tariffs are becoming a key element of
the federal government’s international
trade strategy with additional duties
of 10% announced for the end of the
third quarter, rising to 25% by the end
of 2018.
Despite the current debates, analysts be-
lieve that the impact on prices and sales
will be minimal through the remainder
of 2018-19 as most major retailers have
already imported their inventory for the
holiday season and are attempting to
rush spring inventories through customs
ahead of the new 5% rates. Many man-
ufacturers have managed to avoid rais-
ing prices by absorbing the costs of the
initial first round of tariffs on metals,
machinery and components. On the
down side, small retailers without the
power to lock in prices may be placed at
a competitive disadvantage and contrac-
tors are beginning to require escalation
clauses in contracts to cover potential
cost increases on long range projects.
The key concern for analysts project-
ing 2019-20 tax revenues will be how
the federal government refines its trade
policies and the impact on sales and use
tax revenues. Although higher prices
generate more sales tax from individual
purchases, they also potentially reduce
the number of purchases, particularly in
an environment where rising housing,
education and health care costs compete
for a significant portion of discretionary
income.
Proponents of rising tariffs argue that
the rising strength of the U.S. dollar will
offset the impact of tariff related price
increases on consumers. Opponents
worry that the stronger dollar and the
announced $5.6 billion in retaliatory
tariffs on California exports will neg-
atively impact both the affected com-
panies’ job base and capital investment
in supplies, equipment and expansion
opportunities.