HdL Sales Tax Report for CY2020 Q2 SalesSales Tax Update
In Brief
Top 25 producers
In AlphAbetIcAl Order
www.hdlcompanies.com | 888.861.0220
Q22020
Encinitas
Encinitas’ receipts from April
through June were 5.4% below the
second sales period in 2019. Actual
sales were down 16.5% after adjust-
ing for additional payments received
from last quarter that had been de-
layed by the State’s relief program
to support businesses during the
Covid-19 crisis.The March 19 State lockdown or-
ders temporarily shuttered many
non-essential retailers and had a
profound impact on most categories
within the general consumer goods
group including home furnishings,
sporting goods, and bike stores.The closure of restaurant dining
rooms contributed to the 49% de-
cline for casual eateries. Gasoline
sales were also lower as many em-
ployees transitioned to work from
home during the pandemic.Allocations from the countywide
use tax pool surged 36%, howev-
er, after a recent legislative change
has allowed for the taxation of addi-
tional internet purchases and as and
as more consumers have shifted to
shopping online during the pandem-
ic.Net of aberrations, taxable sales
for all of San Diego County declined
18.9% over the comparable time pe-
riod; the Southern California region
was down 18.0%.
City of Encinitas
Third Quarter Receipts for Second Quarter Sales (April - June 2020)
Published by HdL Companies in Fall 2020
7 Eleven
76
Best Buy
BevMo
BMW of Encinitas
Cardiff Seaside Market
Chevron
Ed Grangetto Agricultural Supply
Encinitas Ford
Financial Services Vehicle Trust
Hansen Surfboards
Herman Cook Volkswagen
Home Depot
Lazy Acres
Quick Shine Car Wash
Ralphs
Shell
Shell Car Wash At Encinitas Ranch
Stater Bros
Target
Trader Joes
USA Gasoline
Vons
Vuori
Walmart Supercenter
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
SALES TAX BY MAJOR BUSINESS GROUP
2nd Quarter 2019*
2nd Quarter 2020*
Business
and
Industry
Fuel and
Service
Stations
Food
and
Drugs
Restaurants
and
Hotels
Autos
and
Transportation
General
Consumer
Goods
County
and State
Pools
*Allocation aberrations have been adjusted to reflect sales activity
$13,392,605 $14,709,987
5,815 6,413
2,461,807 2,021,121
$10,924,982 $12,682,452
2019-202018-19
Point-of-Sale
County Pool
State Pool
Gross Receipts
REVENUE COMPARISON
Four Quarters – Fiscal Year To Date (Q3 to Q2)
NOTESSales Tax Update2Q 2020 City of Encinitas
$0
$2,000
$4,000
$6,000
$8,000
SALES PER CAPITA *
Encinitas
Q2
17
Q2
20
Q2
18
Q2
19
County California
*Allocation aberrations have been adjusted to reflect sales activity
24%
Pools
20%
Cons.Goods
14%
Autos/Trans.
13%
Restaurants
10%
Food/Drug
8%
Building6%
Fuel4%
Bus./Ind.
Encinitas This Quarter*REVENUE BY BUSINESS GROUP
*Allocation aberrations have been adjusted to reflect sales activity
Q2 '20*
Encinitas
ENCINITAS TOP 15 BUSINESS TYPES**
Business Type Change Change Change
County HdL State*In thousands of dollars
-5.5%-9.2%-11.2% 71.1 Auto Lease
-2.0%7.0%3.0% 179.1 Building Materials — CONFIDENTIAL —
-48.8%-53.2%-56.2% 154.0 Casual Dining
19.2%8.4%14.0% 82.7 Convenience Stores/Liquor
3.1%-6.3%-8.9% 204.9 Discount Dept Stores — CONFIDENTIAL —
-32.4%-30.2%-34.2% 72.3 Fast-Casual Restaurants
8.0%3.5%-3.5% 53.7 Garden/Agricultural Supplies
13.6%7.8%10.8% 178.1 Grocery Stores
-53.3%-41.7%-41.4% 51.4 Home Furnishings
147.3%-52.8%7.4% 65.4 Men's Apparel — CONFIDENTIAL —
1.4%-15.8%-16.3% 272.4 New Motor Vehicle Dealers — CONFIDENTIAL —
-25.9%-22.0%-24.4% 123.7 Quick-Service Restaurants
-46.1%-45.2%-38.1% 185.2 Service Stations
-28.2%-36.2%-37.9% 48.3 Specialty Stores
-36.7%-11.0%-13.9% 82.7 Sporting Goods/Bike Stores
-24.0%-28.1%-25.4%
36.1%
-16.5%
2,201.5
682.2
2,883.7
Total All Accounts
County & State Pool Allocation
Gross Receipts
37.6%28.9%
-18.9%-16.3%
** Accounting aberrations such as late payments, fund transfers, and audit adjustments
have been adjusted to reflect the quarter in which the sales occurred.
Statewide Results
Local sales and use tax receipts from April
through June sales were 16.3% lower than
the same quarter of 2019 after factoring
for accounting anomalies and back pay-
ments from previous quarters.
This was the largest quarter to quarter de-
cline since 2009. The drops were deepest
in the San Francisco Bay Area, Central
Coast and Southern California where de-
clines in revenues from fuel, automobiles,
general consumer goods and restaurants/
hotels were the most severe.
However, despite a 14.9% unemployment
rate that eclipsed the previous high of
12.3% during the great recession of 2010
and temporary business closures, the drop
in sales was less than previously projected
by most analysts including HdL.
The high second quarter unemployment
rates primarily affected lower wage service
sectors which generate a smaller share of
sales tax revenues. Internet connected
knowledge workers continued to work
but locked at home, found that they had
extra cash to spend because of reduced
commute and work-related expenses and
few entertainment or travel options. Ad-
ditionally, though much of the quarter’s
government relief payments were spent
largely on rents, utilities and necessities,
the money was not distributed propor-
tionally to income losses thereby adding
temporary discretionary income gains for
some recipients.
Low interest rates and longer term lend-
ing practices allowed the extra money to
be spent on previously delayed purchases
such as autos and home improvements.
New car registrations dropped 48.9%
in the second quarter, but sales tax re-
ceipts dropped only 15.8% as buyers who
did purchase, opted for more expensive
SUV’s, trucks and luxury vehicles. As
cabin fever set in, sales of RV’s, boats and
Motorcycles also began to rise.
With restaurants and many brick and
mortar stores closed or restricted to lim-
ited occupancy, buyers shifted to online
shopping with tax revenues from in-state
fulfillment centers rising 142.7% over the
second quarter of 2019 and county pools
where tax receipts from out-of-state goods
are allocated, rising 28.9%. Online sales
accounted for 52.0% of this quarter’s tax
revenues from the general consumer goods
group.
Working at home eventually morphed
into working on home thereby boosting
related improvement purchases. Grocers,
cannabis, liquor and sporting goods fur-
ther helped offset losses in other segments.
Strong demand for warehouse and ship-
ping technology, equipment and supplies
to accommodate the increase in online
shopping as well as home offices and
virtual classrooms helped offset declines
in the business/industrial group. Un-
anticipated gains in agriculture related
purchases and transit spending further
added to the offset.
Pandemic uncertainties, fires, childcare
issues and bankruptcies are expected to
result in uneven gains through 2020-21
with each jurisdiction’s experience differ-
ing according to the scope and character
of their individual tax bases. Overall
recovery and improvement in statewide
receipts is not expected to begin until
2021-22.