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By Shawn Raymundo
This past holiday shopping season was a particularly good one for San Juan Capistrano, as the city saw an increase in sales tax receipts compared to the same period in 2017, according to the city’s sales tax consultant.
Between October and December of last year—fourth calendar quarter 2018—the city’s sales tax revenue was 1.6% higher than the sales tax revenue generated in the same quarter of 2017, the report from HdL Companies, Inc. noted.
“The City experienced strong returns from multiple new auto dealers supporting the adjusted gains,” the report stated. “While a solid holiday shopping season from multiple general consumer retailers including family apparel and specialty retails also helped.”
San Juan’s sales tax revenue make up roughly 31% percent of the city’s general fund, making it the city’s second largest source of revenue, according to the city’s 2018-19/2019-20 budget. For fiscal 2018-2019, the city’s total projected sales tax revenue is nearly $8.7 million—a 3% increase from the previous fiscal year.
In an email to The Capistrano Dispatch, City Manager Ben Siegel said that uptick of 1.6% from the fourth quarter of 2017 “indicates that the City’s sales tax revenue is growing but at a fairly low rate of growth.”
That low growth rate, Siegel said, is being felt around the state.
“Sales tax revenues are experiencing slower growth statewide,” Siegel said in the email. “Our local economy reflects that trend.”
Siegel also noted that San Juan is still on track to see a growth in sales tax revenue during the current fiscal year, but to 5% now, instead of the 3% initially projected.
“Our sales tax consultant is actually projecting over 5% growth in Fiscal Year 2018-19, much of this due to delays in the receipt of FY 17-18 revenue that was distributed by the State to the City in FY 18-19 as the result of the State’s difficulties with its computer software upgrade,” Siegel wrote.
In San Juan, the state collects a 7.75% sales tax, with the city receiving 1% of that back.
The city’s budget also states that “The City’s lack of sales tax diversification can tend to cause greater fluctuations in revenues during economic cycles.”
Mayor Brian Maryott has previously given similar sentiment while saying much of the city’s sales tax revenue is derived from the local auto dealership industry.
According to the fourth quarter report that the city released on April 25, general consumer retailers and auto dealers in San Juan generated the most revenue from sales taxes during the fourth quarter of 2018.
Siegel said it’s not uncommon for cities to have a certain business sector that generates the majority of its revenue.
“Whereas greater sales tax diversification is always desired, most cities have certain business sectors that are primarily responsible for their local sales tax revenues,” Siegel said in the email. “Like many cities, ours is focused on auto dealerships and major retail.”
Sales tax revenue from general consumer retailers was close to reaching $700,000 in the final quarter of the year, while auto dealers generated about $650,000 of sales tax revenue. The rest of the categories, such as restaurants and hotels, building and construction, and food and drugs, fell below the $300,000 mark.
The report also listed the top 25 producers of fourth-quarter sales tax revenue in San Juan. The list included several car dealerships such as Tuttle-Click’s Capistrano Ford, Capistrano Toyota, Nissan of San Juan Capistrano and Ocean Honda of San Juan Capistrano, to name a few.
Vons, 7 Eleven, Plant Depot, Ross, HD Supply, Costco and Trevor’s at the Tracks also made the list.
Shawn Raymundo is the city editor for The Capistrano Dispatch. Follow him on Twitter @ShawnzyTsunami.