HdL Sales Tax Report for CY2020 Q1 SalesSales Tax Update
In Brief
Top 25 producers
In AlphAbetIcAl Order
www.hdlcompanies.com | 888.861.0220
Q12020
Encinitas
Encinitas’ receipts from January
through March were 18.5% below
the first sales period in 2019 but
the decline was exaggerated by the
Governor’s recent Executive Order
allowing some businesses an ex-
tra 90-days to file their tax return.
Absent this aberration, sales were
down 4.9%.Local restaurant results were lower
after the Governor’s March 19 lock-
down order closed dining rooms
near the tail-end of the quarter. This
decline was further magnified by nu-
merous partial payments, which will
be made up in future quarters.Service station receipts fell as
many employees transitioned to
working from home, while sporting
good and home furnishing sales
also declined.Allocations from the countywide
use tax pool, however, surged 24%
after a recent legislative change that
allows the State to collect tax rev-
enue from small, third-party sell-
ers on internet-based, market-plat-
forms.Net of aberrations, taxable sales
for all of San Diego County declined
4.0% over the comparable time pe-
riod; the Southern California region
was down 4.1%.
City of Encinitas
Second Quarter Receipts for First Quarter Sales (January - March 2020)
Published by HdL Companies in Summer 2020
7 Eleven
76
Best Buy
BMW of Encinitas
Cardiff Seaside Market
Chevron
Encinitas Ford
Financial Services Vehicle Trust
Herman Cook Volkswagen
Home Depot
Home Goods
Lazy Acres
Pacific Coast Grill
Quick Shine Car Wash
REI
Shell
Shell Car Wash At Encinitas Ranch
Stater Bros
Target
TJ Maxx
Trader Joes
Valero
Vons
Vuori
Walmart Supercenter
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
SALES TAX BY MAJOR BUSINESS GROUP
1st Quarter 2019*
1st Quarter 2020*
General
Consumer
Goods
County
and State
Pools
Restaurants
and
Hotels
Autos
and
Transportation
Food
and
Drugs
Fuel and
Service
Stations
Building
and
Construction
Business
and
Industry
*Allocation aberrations have been adjusted to reflect sales activity
$10,112,290 $11,240,876
4,773 5,112
1,754,827 1,517,878
$8,352,690 $9,717,886
2019-202018-19
Point-of-Sale
County Pool
State Pool
Gross Receipts
REVENUE COMPARISON
Three Quarters – Fiscal Year To Date (Q3 to Q1)
NOTESSales Tax UpdateQ1 2020 City of Encinitas
$0
$2,000
$4,000
$6,000
$8,000
SALES PER CAPITA *
Encinitas
Q1
17
Q1
20
Q1
18
Q1
19
County California
*Allocation aberrations have been adjusted to reflect sales activity
23%
Cons.Goods
19%
Pools
16%
Restaurants
13%
Autos/Trans.
9%
Food/Drug
8%
Fuel
8%
Building4%
Bus./Ind.
Encinitas This Quarter*REVENUE BY BUSINESS GROUP
*Allocation aberrations have been adjusted to reflect sales activity
Q1 '20*
Encinitas
ENCINITAS TOP 15 BUSINESS TYPES**
Business Type Change Change Change
County HdL State*In thousands of dollars
2.3%1.6%0.1% 75.0 Auto Lease — CONFIDENTIAL —
-3.8%3.0%-0.5% 185.8 Building Materials — CONFIDENTIAL —
-19.1%-18.8%-18.2% 231.7 Casual Dining
-3.0%-4.4%-4.3% 59.0 Convenience Stores/Liquor
-0.8%3.2%3.8% 179.2 Discount Dept Stores — CONFIDENTIAL —
-15.9%-18.0%-18.5% 70.4 Electronics/Appliance Stores
-19.7%-21.1%-21.4% 66.9 Family Apparel
-21.3%-9.9%-11.3% 80.0 Fast-Casual Restaurants
13.0%11.8%13.1% 162.6 Grocery Stores
-24.0%-13.0%-13.6% 82.0 Home Furnishings
-5.3%-10.6%-10.4% 226.7 New Motor Vehicle Dealers — CONFIDENTIAL —
-15.1%-8.5%-9.1% 132.4 Quick-Service Restaurants
-11.9%-9.5%-8.9% 249.1 Service Stations
-12.9%-10.1%-10.6% 52.7 Specialty Stores
-21.5%-10.3%-13.1% 85.9 Sporting Goods/Bike Stores
-7.3%-8.0%-9.7%
23.9%
-4.9%
2,420.4
555.4
2,975.8
Total All Accounts
County & State Pool Allocation
Gross Receipts
19.3%22.4%
-4.0%-3.0%
** 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
With stay at home/non-essential busi-
ness restrictions in place during the last
two weeks of the quarter, local one cent
tax revenues for the state overall, were
18.8% lower than January to March of
2019. Taxpayer relief programs account-
ed for much of the decline with receipts
down roughly 3.1% after factoring for
payment deferrals and other accounting
anomalies.
Severe drops in auto sales, general
consumer goods, service stations and
restaurants were largely offset by new
revenue from implementation of the
Wayfair v. South Dakota decision that
now requires out-of-state retailers to col-
lect and remit Californian’s sales and use
tax. Other offsets included a surge in
online shopping that boosted receipts
from the county use tax allocation pools
and from online retailers who maintain
and ship their inventory from within
California.
The food/drug sector also showed strong
gains as did many home supply, dollar
and discount stores that remained open
during the shutdown.
New Challenges & Opportunities
Current indicators suggest that overall
tax receipts for the April thru June sales
period will bottom out at 27% below
the second quarter of 2019. The speed
of the rebound in sales activity will be
dependent on the availability of ade-
quate testing, treatment therapies and
ultimately a vaccine. Until then, phys-
ical distancing, COVID-19 protocols
and supply chain disruptions will create
limitations on some operating capacities
and the return to work of all employees.
Health fears, discounts and liquidation
sales may also keep sales tax revenues
below pre-pandemic levels until solu-
tions are in place.
Regardless of when full recovery does
occur, reports are that some elements
of the economy will be permanently
altered. Generation of future tax rev-
enues may require rethinking of local
economic strategies.
Over expansion, excessive debt and
consumer shifts to online shopping were
already resulting in bankruptcies with es-
timates of up to 25,000 brick -and-mortar
store closings by the end of 2020. “Touch
and feel” shopping is not going away but
retailers see an evolution where in-store
shopping is more leisure/recreational ori-
ented with smaller stores offering more
show-rooming and delivery/pick-up
services. The smaller footprints and life-
style emphasis offer opportunities to rein-
state downtowns and neighborhood cen-
ters as economic/social gathering places.
The Pandemic’s capture of new online
customers and the growing trend of man-
ufacturers and entrepreneurs with new
concepts to bypass physical stores and sell
directly to the consumer also expands op-
tions for agencies without large market
populations to generate sales tax through
industrial development.
Finally, the Pandemic’s disruption of sup-
ply chains has also accelerated growing
dissatisfaction with overseas arrangements
and some reshoring will occur which
offers opportunities to leverage a city’s ex-
isting business base to attract compatible
support industries.