Title
Recommendation to Accept the Quarterly Sales Tax Report for the Reporting Period Ending March 31, 2018 (Funds Collected During the Period October 1, 2017 to December 31, 2017). (Finance 2410)
Body
To: Honorable Mayor and Members of the City Council
From: Elizabeth D. Warmerdam, Acting City Manager
Re: Recommendation to Accept the Quarterly Sales Tax Report for the Reporting Period Ending March 31, 2018 (Funds Collected During the Period of October 1, 2017 to December 31, 2017)
BACKGROUND-
This report summarizes the sales tax receipts for the point-of-sales activity for the period of October 1 through December 31, 2017. This is the basis for sales tax revenues received by the City between January 1, 2018 and March 31, 2018. For the purposes of this report, sales tax revenues exclude Proposition 172 funds, the allocation from statewide pool for public safety services.
DISCUSSION
Fiscal Year to Date (July 1 to March 31)
For the 2017-18 Fiscal Year, Sales Tax is the second largest source of General Fund revenues for the City of Alameda, representing approximately 10% of the total revised budgeted revenues. As of March 31, 2018 (in a nine month period), the General Fund has received approximately $5.8 million in Sales Tax receipts. The General Fund received close to $5.5 million in Sales Tax receipts during the same period last fiscal year. This represents a 5.5% increase in year over year Sales Tax revenues received for that period.
Fuel prices, building and construction were strong in this quarter. Contractors’ sales were up, reflecting a strong construction market. There was strong growth from wireless outlets and receipts from new novelty and specialty stores, which helped lift the general retail group. Gains were offset by lower overall receipts in the business to business sector, a sharp decline in yacht sales, and a decrease in the City’s allocation from the county-wide use tax pool causing receipts during this time period to be flat compared to the previous year.
In the fall 2017, the City renewed its contract with Hinderliter de Llamas (HdL) for review and analysis of the sales and use tax revenue. Exhibit 2 shows annual sales tax recovery HdL achieved while in contract with the City. Expected sales tax recovery for 2017 is estimated at $91,000.
4th Quarter 2017 to 4th Quarter 2016 Comparison
While the fiscal year to date increased 5.5%, the current quarter comparison to same quarter last year remained flat. 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.
Restaurants reflected the largest gain in the quarter, although ongoing payment aberrations in casual dining inflated the results. The Business and Industry category had a misallocated payment in the prior year which was the primary contributor to the lower gross receipts. Excluding reporting adjustments, actual sales were up 1.8%.
Continual rising fuel prices pushed service station receipts up. A strong construction market was caused by increased sales for contractors. General Consumer Goods receipts from consumers patronizing brick and mortar stores were up.
The following is a summary of Sales Tax by geographic area, in comparison with the same quarter of the prior year:
Webster, Alameda Landing, Marina Village Business Park, Alameda Marina, and North Waterfront geographic areas showed significant increases due to continued new business activity, casual dining outlets, quick-service eateries, and brick and mortar shopping. The remaining geographic areas were net flat.
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 - 3rd 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 reporting period ending March 31, 2018 (funds collected during the period October 1, 2017 to December 31, 2017).
Respectfully submitted by,
Elena Adair, Finance Director
Exhibits:
1. Quarterly Sales Tax Report
2. Annual Sales Tax Recovery