Title
Recommendation to Accept the Quarterly Sales Tax Report for the Reporting Period Ending June 30, 2020 (Funds Collected During the Period January 1 to March 31, 2020). (Finance 2410)
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
The California Department of Taxes and Fees Administration (CDTFA) 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, 2020 (funds collected during the period of January 1 to March 31, 2020 and recognized as revenue in the current fiscal year).
BACKGROUND-
This report summarizes the sales tax receipts for the point-of-sales activity for the period of January 1 through March 31, 2020. This is the basis for sales tax revenues received by the City between April 1 and June 30, 2020. For the purpose of this report, sales tax revenues exclude Proposition 172 funds, the allocation from the statewide pool for public safety services.
DISCUSSION
Fiscal Year to Date (July 1 to March 31)
For the 2019-20 Fiscal Year (FY), sales tax shifted to be the third largest source of General Fund revenues for the City (behind property tax and transfer tax), representing approximately 11% of the total budgeted revenues. As of June 30, 2020, the General Fund has received approximately $8.4 million in sales tax receipts. The General Fund received $9.2 million in sales tax receipts during the same period of the last fiscal year. On a fiscal year basis over the same time period, sales tax revenue decreased.
On April 1, 2019, Measure F, the City’s voter-approved half cent transactions and use tax, became effective. Budget projections for 2019-20 for the Transaction and Use Tax were $5.5 million. As of June 30, 2020, the General Fund received approximately $5.4 million in sales tax receipts.
1st Quarter 2020 to 1st Quarter 2019 Comparison
Due to the COVID-19 shelter-in-place declaration in mid-March, the City’s receipts from January through March 2020 were 32.1% lower than 1st quarter sales in 2018. Cash allocations were affected by eligible companies taking advantage of the extra 90 days to file tax returns under the Governor’s Executive Order. Excluding reporting anomalies, actual sales were down almost 10%. 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.
General consumer goods were hard hit by COVID. Retail spending was affected due to store closures, no impulse buying, and no foot traffic. Restaurants and hotels had 50% dining room capacity for at least six months, and there is no timeline for allowing large events. 62% of casual dining restaurants are making less than 50% of their previous revenues. Hotel vacancy was down 85%. Food and drugs showed a positive increase because they are considered essential. Groceries reflected a 12% increase.
The following is a summary of sales tax collected by geographic area, in comparison with the same quarter of the prior year:
Those geographic areas with essential stores - food and drugs - reflected increases. Casual take-out dining helped to minimize the decrease.
This quarter’s report (Exhibit 1) 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 2020
Transactions and Use Tax (Measure F)
Measure F, the City’s voter-approved half percent transactions and use tax, became effective April 1, 2019. This is the fourth quarter of the new tax collection. The budget estimate for the transaction and use tax to be recognized in FY 2019-20 was revised as part of the mid-year update to $5.5 million from $4.6 million. Between July 2019 and June 2020, the General Fund received approximately $5.4 million in transaction and use tax receipts.
With the implementation of the transactions and use tax increase (Measure F), the City’s sales tax rate increased to 9.75% effective April 1, 2019.
ALTERNATIVES
• Accept the quarterly sales tax report.
• Do not accept the report and provide direction to staff.
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 are no climate impacts from the acceptance of this report.
RECOMMENDATION
Accept the Quarterly Sales Tax Report for the reporting period ending June 30, 2020 (funds collected during the period January 1 to March 31, 2020).
CITY MANAGER RECOMMENDATION
The City Manager recommends acceptance of the Quarterly Sales Tax Report.
Respectfully submitted by,
Nancy Bronstein, Interim Finance Director
Exhibits:
1. Quarterly Sales Tax Report
2. Quarterly Transactions Tax
cc: Eric Levitt, City Manager
Gerry Beaudin, Assistant City Manager