Title
Recommendation to Accept the Quarterly Sales Tax Report for the Period Ending June 30, 2016 Collected During the Period January 1, 2016 to March 31, 2016. (Finance 2410)
Body
To: Honorable Mayor and Members of the City Council
From: Jill Keimach, City Manager
Re: Recommendation to Accept the Quarterly Sales Tax Report for the Period Ending June 30, 2016 Collected During the Period of January 1, 2016 to March 31, 2016
BACKGROUND-
This report summarizes the sales tax receipts for the point-of-sales activity for the period of January 1 through March 31, 2016. This is the basis for sales tax revenues received by the City between April 1, 2016 and June 30, 2016. For the purposes of this report, sales tax revenues exclude Proposition 172 funds, the allocation from statewide pool for public safety services.
DISCUSSION
For the 2015-16 fiscal year, sales tax is the second largest single source of General Fund revenues for the City, representing approximately 11% of the total budgeted revenues. As of June 30, 2016, the General Fund has received about $6.1 million (83% of budget) in sales tax revenues. The General Fund received $5.6 million during the same period last fiscal year. This represents a 9% increase in year over year sales tax revenues received between July 2015 and June 2016.
Total sales tax revenue recognized in Fiscal Year (FY) 2015-16, including the final payment for the “triple flip” unwinding, is $9.6 million. This is 4% greater than total sales tax revenue recognized in FY 2014-15.
The following is a summary of sales tax performance by key economic categories in comparison to the same quarter of the prior year:
There was a decrease of approximately $358,000 in sales tax revenues for the first quarter of 2016 compared to the same quarter of the previous year. A one-time reporting aberration caused or exaggerated declines in multiple business and industry segments. Similar aberrations affected building and construction category results impacting the percent change over the previous year.
New business additions helped restaurants and hotels and general consumer goods results. Specialty stores, electronics-appliance stores, and home furnishings reflected the trend of consumers buying more from online retailers. This trend also impacted online purchases and the shift of tax revenues from brick and mortar retail stores to fulfillment centers that process orders online. Autos and transportation and food and drug segments reported sales increases.
As discussed in the prior quarterly report, a reporting error from a tax paying entity temporarily spiked the results in the General Consumer Goods category and skewed the year to date sales tax receipts by an estimated $450,000. Per a conversation with a Board of Equalization representative, the error was corrected in September 2016. In the current quarter, another large reporting error was made by a different tax paying entity that caused a significant decline in the sales tax receipts of approximately $306,000. This error will not be corrected until the next fiscal year. However, Finance will account for the correction of the error in Fiscal Year 2015-16.
South Shore Center, Alameda Landing, Park Street south of Lincoln Avenue, Park Street north of Lincoln Avenue, and Clement & Blanding Avenues experienced steady increase, some due to new business activity. Note that some geographic areas showed decreases. The large sales tax decline in the Harbor Bay Business Park area is a result of the current quarter aberration discussed above.
This Quarterly report includes a supplemental section containing the following information:
1. City of Alameda Sales Tax Update
2. Major Industry Groups - Current Quarter Comparison
3. Major Industry Groups - 13 Quarters History
4. Sales by Geographic Area - 13 Quarters History
5. Per Capita Sales Tax Surplus/Gap Comparison by Retail Category
6. Quarterly Sales Comparison of Cities in Alameda County
7. Seven Cities Per Capita Sales Comparison
8. City to State Comparison by Sector - 1st Quarter 2016
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This action is in conformance with the Alameda Municipal Code and all policy documents.
ENVIRONMENTAL REVIEW
This activity is not a project and is exempt from the California Environmental Quality Act (CEQA) pursuant to section 15378 (b)(4) of the CEQA Guidelines, because it involves governmental fiscal activities, which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment.
RECOMMENDATION
Accept the Quarterly Sales Tax Report for the period ending June 30, 2016 collected during the period January 1, 2016 to March 31, 2016.
Respectfully submitted by,
Elena Adair, Finance Director
Exhibit:
1. Quarterly Sales Tax Report Supplemental Information