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HdL Sales Tax Report for CY2022 Q1 Saleswww.hdlcompanies.com | 888.861.0220 Q1 2021* Q1 2022* Legend $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 SALES TAX BY MAJOR BUSINESS GROUP*Allocation aberrations have been adjusted to reflect sales activity General Consumer Goods County and State Pools Restaurants and Hotels Autos and Transportation Fuel and Service Stations Building and Construction Food and Drugs Business and Industry TOP 25 PRODUCERSCITY OF ENCINITAS HIGHLIGHTS Published by HdL Companies in Summer 2022 SALES TAX UPDATE CITY OF ENCINITAS 1Q 2022 (JANUARY - MARCH) 7 Eleven 76 Alila Marea Beach Resort Encinitas 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 IFE Marketing Pacific Coast Grill Quick Shine Car Wash REI Shell Shell Car Wash At Encinitas Ranch Target TJ Maxx Valero Vons Walmart Supercenter Encinitas’ receipts from January through March were 20% above the first sales period in 2021. Adjustments for delayed payments, audit and other reporting modifications resulted in actual sales that were up 13.4%. Overall place of sale collections soared almost 14% compared to a year ago. The economy demonstrated strength and resiliency during the first three months of the year. The City’s largest sales tax group, general consumer goods, is the only group that posted a decline in overall sales. While most business types in this tax group demonstrated growth, an adjustment by a single taxpayer skewed revenues down 7.8% for the quarter. However, a 12% increase in allocations from the countywide use tax pool contributed to the overall positive quarterly outcome as the pools remain a solid source of local revenue, boosted by taxes on e-commerce. Restaurants, especially casual dining, experienced another sensational sales period as patrons seemed unfazed by more expensive menus and enjoyed the experience of dining out – which may have contributed to a dip in convenience/ liquor store sales. Autos-transportation continued to boast increased revenues; and with the global cost of crude oil resulting in higher local gas prices and more commuters on the road, receipts from service stations skyrocketed 47%. Business-industry results were lifted by a new taxpayer payment. Net of adjustments, taxable sales for all of San Diego County grew 20.0% over the comparable time period; the Southern California region was up 19.2%. TOTAL:$ 4,082,465 13.4% 20.0% 17.1% COUNTY STATE ENCINITAS 1Q2022 TOP NON-CONFIDENTIAL BUSINESS TYPES Q1 '22* EncinitasBusiness Type Change Change ChangeCountyHdL State 43.3%37.2%42.4% 385.9 Service Stations 55.8%65.0%47.0% 322.5 Casual Dining 7.8%8.9%5.5% 164.1 Quick-Service Restaurants 3.2%3.0%1.0% 156.7 Grocery Stores -5.1%-7.3%-2.8% 150.1 Sporting Goods/Bike Stores 0.9%3.0%14.1% 130.6 Home Furnishings 11.3%18.2%7.8% 106.8 Fast-Casual Restaurants 11.2%15.4%17.2% 84.6 Specialty Stores 9.4%14.6%5.2% 77.8 Family Apparel 12.7%34.1%1.0% 74.0 Electronics/Appliance Stores *Allocation aberrations have been adjusted to reflect sales activity *In thousands of dollars REVENUE BY BUSINESS GROUP Encinitas This Quarter* 20% Pools 16% Restaurants 16% Autos/Trans. 7% Building 4% Bus./Ind. 21% Cons.Goods 7% Food/Drug 10% Fuel *ADJUSTED FORECONOMIC DATA SALES TAX UPDATECITY OF ENCINITAS1Q 2022 STATEWIDE RESULTS California’s local one-cent sales and use tax for sales occurring January through March was 17% higher than the same quarter one year ago, after adjusting for accounting anomalies and onetime payments from previous quarters. By all accounts, the California retail economy continues roaring along. Even with instability in the stock market, the crisis in Ukraine pushing up the global price of crude oil and the U.S. Federal Reserve Board beginning to tackle inflation with a series of rate increases, consumer spending continued at a strong pace. The invasion of Ukraine by Russian military forces on February 24 had an immediate upward impact on the global price of crude oil due to fears of supply shortages. Subsequently this has caused a dramatic jump to California consumer gas and diesel prices at a time when many in the workforce were commuting back into offices, also contributing to an overall increase in consumption. As expected, fuel and service station receipts increased 47% over last year and show no signs of pulling back with summer travel right around the corner. Sales of new and used vehicles continue to be robust causing the autos and transportation sector to jump 15% for the period. Inventory shortages by some dealers may have caused buyers to experience a Fear Of Missing Out (FOMO) and pay elevated prices while interest rates remained lower. Automotive brands that have committed to full electric or hybrid models are attractive with consumers, especially given the sudden rise in fuel prices. Post-holiday retail sales of general consumer goods remained solid, improving 10%. Prior supply chain concerns have dissipated, port operations are returning to normal and headwinds from inflation and higher cost goods haven’t yet slowed consumer demand. The stellar returns were largely driven by discount department stores, especially those selling gas. These results mark the fourth full quarter in a row that restaurant and hotel receipts have increased. While higher menu prices have contributed, steady demand by patrons to dine out is also propelling the gains. Furthermore, theme parks and entertainment venues throughout the state are busy. With the summer tourism and travel season approaching, the industry is positioned to maintain post-pandemic growth and remain positive through 2022. Use taxes generated by online sales and purchases from out-of-sate vendors allocated via the county pools, heartily surpassed expectations, gaining 13% over the comparison period. Shoppers bought a range of merchandise and spending by businesses on capital equipment remained sensational. The first quarter sales period contributed to an already strong 2021-22 fiscal year for most municipalities statewide. However, continued inflationary pressure, soaring interest rates and record gas prices may soften growth going into 2022-23.