Title
Recommendation to Accept the Quarterly Sales Tax Report for the Reporting Period Ending June 30, 2019 (Funds Collected During the Period January 1 to March 31, 2019). (Finance 2410)
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
The California Department of Taxes and Fees Administration (CDTFA), formerly the Board of Equalization, allocates sales tax to the City of Alameda (City) on a monthly basis. This report provides information about the activity for the period ending June 30, 2019 (funds collected during the period of January 1 to March 31, 2019).
BACKGROUND-
This report summarizes the sales tax receipts for the point-of-sales activity for the period of January 1 through March 31, 2019. This is the basis for sales tax revenues received by the City between April 1 and June 30, 2019. For the purpose of this report, sales tax revenues exclude Proposition 172 funds, the allocation from a statewide pool for public safety services.
DISCUSSION
Fiscal Year to Date (July 1 to June 30)
In the last quarter of the 2018-19 Fiscal Year, sales tax shifted to be the third largest source of General Fund revenues for the City, representing approximately 11% of the total budgeted revenues. As of June 30, 2019, the General Fund has received approximately $10.1 million in sales tax receipts. The General Fund received $10.3 million in sales tax receipts during the same period last fiscal year. This represents a 1% decrease in year over year sales tax revenues received for that period.
Business to business transactions actually posted a gain of 17% despite slow performance in some sectors. There were continuing adjustments by the California Department of Taxes and Fees Administration (CDTFA) in resolving outstanding payments that resulted from taxpayer processing complications due to their new computer system that launched earlier last year. Measure F, the City’s voter-approved half cent transactions and use tax, became effective April 1.
In 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 calendar year 2018 is estimated at $123,678. The prior calendar year’s actual recovery was $118,821, approximately $28,000 more than originally estimated.
1st Quarter 2019 to 1st Quarter 2018 Comparison
Alameda’s receipts from January through March showed a 30.9% increase compared to the first quarter sales period in 2018. Excluding reporting anomalies, actual sales were up 16.1%. The following is a summary of sales tax performance by key economic categories in comparison to the same quarter of the prior year based on numbers adjusted for aberrations.
Most economic categories show increases for the quarter. The multi-quarter adjustments that occurred, due to the CDTFA processing late payments, spiked returns in building & construction. On the adjusted basis, the building & construction category experienced solid results due to project-based allocations. The 6.2% rise in restaurants was due to a new addition in casual dining. Post-holiday retail was comparable to a year ago. The business-industry group experienced an increase mostly as a result of increased activities, and a recent opening accounted for the 2.1% rise in food and drugs category once anomalies were removed. Fuel and service stations remained about even on an adjusted basis.
The following is a summary of sales tax by geographic area, in comparison with the same quarter of the prior year:
The majority of the geographic areas showed a slight increase, with Harbor Bay Business Park experiencing the greatest increase.
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. Alameda County All Agencies Comparison
7. Seven Cities Per Capita Sales Comparison
8. City to State Comparison by Sector - 1st Quarter 2019
ALTERNATIVES
Accept the report due to no further action being requested.
FINANCIAL IMPACT
This is an informational item only. There is no financial impact from acceptance of the report.
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 that do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment.
CLIMATE IMPACT
There is no climate impact from acceptance of this report.
RECOMMENDATION
Accept the Quarterly Sales Tax Report for the reporting period ending June 30, 2019 (funds collected during the period January 1 to March 31, 2019).
CITY MANAGER RECOMMENDATION
City Manager recommends accepting the quarterly sales tax report.
Respectfully submitted by,
Elena Adair, Finance Director
Exhibit:
1. Quarterly Sales Tax Report
2. Annual Sales Tax Recovery