Title
Recommendation to Accept the Quarterly Sales Tax Report for the Board of Equalization Period Ending September 30, 2017 (Funds Collected During the Period April 1, 2017 to June 30, 2017). (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 September 30, 2017 Collected During the Period of April 1, 2017 to June 30, 2017
BACKGROUND-
This report summarizes the sales tax receipts for the point-of-sales activity for the period of April 1 through June 30, 2017. This is the basis for sales tax revenues received by the City between July 1, 2017 and September 30, 2017. 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 2016-17 Fiscal Year, Sales Tax is the second largest source of General Fund revenues for the City of Alameda, representing approximately 11% of the total budgeted revenues. As of September 30, 2017, the General Fund has received approximately $9.5 million in Sales Tax receipts. The General Fund received close to $7.3 million in Sales Tax receipts during the same period last fiscal year. This represents a 30% increase in year over year Sales Tax revenues received between July 2016 and June 2017. The significant difference between the two years’ revenue to date was due to a large underpayment in 2015-16 that was corrected with a double payment that inflated the Business and Industry category this year. In addition, the State’s 25% sales tax shift (“triple flip”) final clean-up payment covering the first two quarters of the prior fiscal year was not received by the City until August 2016. Further, noted gains were realized in the Business and Industry group, general consumer goods, and restaurants and hotels.
2ndt Quarter 2017 to 2nd Quarter 2016 Comparison
On the following page is a summary of sales tax performance by key economic categories in comparison to the same quarter of the prior year.
The City showed a significant increase of $787,000 in sales tax revenues for the second quarter of 2017, 39.1% above the same sales period in 2016 based on actual cash receipts. The Business and Industry category had a misallocated payment in the prior year and positive adjustment in the current year. Excluding those aberrations, this sector experienced a strong growth second quarter in a row. Recently-added retailers and a payment correction also account for this gain. On adjusted basis, the growth was at 19.3% in this economic category.
A 38% increase in the City’s share of the countywide use tax pool allocation also contributed to the overall positive outcome. Ongoing preferences for dining out reflected improved revenues across Restaurants and Hotels. A vendor audit generated a negative correction, decreasing fuel and service stations tax returns. After removing this irregularity, taxes rose modestly due to higher petroleum prices. General Consumer Goods category experienced misallocations in the same quarter of the prior year giving a perception of a significant increase. However, adjusting for these anomalies, actual activity was flat compared to prior year.
The following is a summary of Sales Tax by geographic area, in comparison with the same quarter of the prior year:
Harbor Bay Business Park showed a major increase among the geographic areas. Alameda Landing, Park Street north of Lincoln Avenue, and Webster showed increases, some due to casual dining outlets, quick-service eateries, and continued new business activity. South Shore Center, Park Street South of Lincoln Avenue, and Alameda Point reflected a decrease in consumer spending.
This quarter’s 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 - 2st Quarter 2017
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 September 30, 2017 collected during the period April 1, 2017 to June 30, 2017.
Respectfully submitted by,
Elena Adair, Finance Director
Exhibit:
1. Quarterly Sales Tax Report