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HdL Sales Tax Report for CY2022 Q4 Saleswww.hdlcompanies.com | 888.861.0220 Q4 2021* Q4 2022* Legend $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 SALES TAX BY MAJOR BUSINESS GROUP*Allocation aberrations have been adjusted to reflect sales activity General Consumer Goods County and State Pools Autos and Transportation Restaurants and Hotels Fuel and Service Stations Food and Drugs Building and Construction Business and Industry TOP 25 PRODUCERSCITY OF ENCINITAS HIGHLIGHTS Published by HdL Companies in Spring 2023 SALES TAX UPDATE CITY OF ENCINITAS 4Q 2022 (OCTOBER - DECEMBER) 7 Eleven 76 Alila Marea Beach Resort Encinitas Best Buy BMW of Encinitas 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 Shell Car Wash At Encinitas Ranch Target TJ Maxx Total Wine Spirits Beer & More Traders Joe Valero Vons Vuori Walmart Supercenter Encinitas’ gross receipts from October through December were 6.6% below the fourth sales period in 2021. After adjusting for reporting modifications, net revenues were essentially even at 0.5% higher than a year ago. Results were mixed as economic pressures may have influenced some buying decisions. While ending in positive territory, general consumer goods showed some signs of slowing during the busy shopping season; however, family apparel, jewelry, and specialty stores posted quarterly gains. The autos-transportation group jumped up 9%, assisted by auto repair sales. As in previous quarters, residents and visitors enjoyed the experience of casual and quick-service dining – even with higher menu prices. A new business in the convenience store sector lifted overall food-drugs receipts. Garden- agricultural related sales helped support the business-industry group; and activity in the building-construction group boosted revenues. Conversely, while most service station revenues increased, overall results dipped due to comparison to a high allocation a year ago. The countywide use tax pool revenues shrank due to lower ecommerce allocations and third party auto sales, as well as a large payment last year – dropping the City’s allocation 14.8%. Net of adjustments, taxable sales for all of San Diego County grew 6.7% over the comparable time period; the Southern California region was up 5.1%. TOTAL:$ 4,585,090 0.5% 6.7% 4.7% COUNTY STATE ENCINITAS 4Q2022 TOP NON-CONFIDENTIAL BUSINESS TYPES Q4 '22* EncinitasBusiness Type Change Change ChangeCountyHdL State 8.2%9.7%12.6% 367.3 Casual Dining 7.5%5.2%-7.3% 348.7 Service Stations -4.3%-5.8%-2.6% 185.8 Sporting Goods/Bike Stores 5.7%5.1%1.4% 179.5 Quick-Service Restaurants 6.2%5.8%-1.4% 178.4 Grocery Stores -0.9%3.1%0.9% 143.1 Family Apparel 0.9%7.1%44.4% 132.4 Convenience Stores/Liquor 1.9%1.7%3.8% 124.0 Specialty Stores -6.9%-1.2%-3.1% 120.7 Home Furnishings 6.6%8.1%0.2% 107.8 Fast-Casual Restaurants *Allocation aberrations have been adjusted to reflect sales activity *In thousands of dollars REVENUE BY BUSINESS GROUP Encinitas This Calendar Year* 18% Pools 17% Restaurants 16% Autos/Trans. 7% Building 4% Bus./Ind. 22% Cons.Goods 7% Food/Drug 9% Fuel *ADJUSTED FORECONOMIC DATA SALES TAX UPDATECITY OF ENCINITAS4Q 2022 STATEWIDE RESULTS California’s local one cent sales and use tax receipts for sales during the months of October through December were 4.7% higher than the same quarter one year ago after adjusting for accounting anomalies. A holiday shopping quarter, the most consequential sales period of the year, experienced solid results which lifted revenue to local agencies across the State. Overall, general consumer goods growth was up a meager 1.8%, in large part from merchants also selling gas as prices remained elevated over last year. Otherwise, many brick and mortar retailers experienced mixed results as the phenomenal prior year activity made for an extremely difficult comparison. This was especially true for jewelry stores receipts which had soared tremendously after the pandemic as consumers diversified readily available cash into other assets. Commuters and seasonal travelers were again burdened with gas prices above $5 per gallon in most of the State, leaving fuel- service stations 10% higher than a year ago. However, this trend did not distract from spending at local restaurants and hotels. Increased menu prices and return- to-office workplaces enhanced gains, with the Bay Area experiencing it’s greatest amount of post-pandemic rebound. Although inventory shortages negatively impacted unit sales and leasing activity throughout 2022, year-end returns by new car dealers, especially high-end luxury and electric/hybrid brands, sustained auto- transportation sector gains. In contrast, rising interest rates and higher gas prices pulled trailer-RV revenues lower. Steady housing demand and pend up construction projects delayed by supply chain interruptions have contractors contributing the majority of growth within the building-construction sector. With rising interest rates tempering selling activity, property owners are still likely to maintain home improvement spending. Use taxes remitted via the countywide pools rose a scant 0.3%. While national ecommerce spending behaviors climbed upward again, expansion of more in-state fulfilment centers plus retailers using existing locations to deliver goods tied to online orders shifted taxes away from pools. The offsetting effect was these dollars being directed to local agency’s coffers where the goods resided. This evolving trend is anticipated to persistently weaken taxes coming from the pools in the near term. Looking back, calendar year 2022 exhibited a 9.5% surge in tax receipts compared to 2021. Each of the eight major tax categories all reported greater returns. Most influential was inflation that drove up prices on everything from normal daily purchases to vehicles. Secondarily, all-time peak global crude oil costs had fuel seller’s payments skyrocketing. Heading into 2023, additional interest rate hikes along with consumer sentiment waning about the economy foretells minimal change coming from California’s taxable sales in the months ahead.