REQUEST FOR CITY COUNCIL ACTION
DATE: 05/01/2024
TO: Honorable Mayor and City Council Members
FROM: Finance Department
SUBJECT:
Title
QUARTERLY SALES TAX REPORT - 2023, QUARTER 4 (OCTOBER - DECEMBER)
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EXECUTIVE SUMMARY:
The City of Corona contracts HdL Companies to provide sales tax consulting services, which include quarterly data reports. The sales tax report for Quarter 4 2023 is provided to the City Council as a receive and file item.
RECOMMENDED ACTION:
Recommended action
That the City Council receives and files the quarterly sales tax information from HdL Companies for Quarter 4 2023 (October- December).
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BACKGROUND & HISTORY:
HdL Companies is contracted to provide sales tax consulting services for the City. On a quarterly basis, they review and analyze the City’s sales tax activity. Their resources provide them with information to understand sales tax trends and how the City is performing compared to agencies near Corona, agencies in Riverside County, Southern California, and the State. There is a one-quarter lag in when the information is available to the HdL Companies for their review and analysis.
ANALYSIS:
The quarterly sales tax report is provided for Quarter 4 2023 (October - December). Highlights of the report are included below. Additional details can be found in the attached quarterly report and exhibits.
Quarter 4 2023 (October - December)
Corona’s sales tax receipts from October through December 2023 were 2.5% below the same period in 2022. Excluding reporting aberrations, actual sales decreased by 1.5%. The decline in tax receipts from new car dealers was significant, but partially credited to a recent ownership transition at a local dealership causing temporary disruptions in returns. Other business-industrial equipment also suffered, reflecting the nationwide trend. This decline indicated reduced manufacturing and business-industrial activities across the country. Fuel and service station returns were also affected, aligned with the period’s decrease in gasoline prices at the pump.
There was also some good news, notably strong returns from local contractors amongst rising construction input costs.
Measure X sales tax activity decreased year-over-year primarily due to lower business-industrial purchases, resident auto sales, and declined gasoline expenditures.
Net of variances, taxable sales in Riverside County decreased by 0.9% while the Southern California region experienced a 2.0% dip over the same period.
FINANCIAL IMPACT:
There is no financial impact associated with the recommended action.
ENVIRONMENTAL ANALYSIS:
This action is exempt pursuant to Section 15061(b)(3) of the Guidelines for the California Environmental Quality Act (CEQA), which states that a project is exempt from CEQA if the activity is covered by the common sense exemption that CEQA applies only to projects that have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. This action is to receive and file a quarterly sales tax report, and there is no possibility that approval of the recommended actions will have a significant effect on the environment. Therefore, no environmental analysis is required.
PREPARED BY: KIM SITTON, FINANCE DIRECTOR
REVIEWED BY: BRETT CHANNING, ASSISTANT CITY MANAGER
Attachments:
1. Exhibit 1 - 2023-Q4 Sales Tax Update Report
2. Exhibit 2 - 2023-Q4 Sales Tax Update Newsletter
3. Exhibit 3 - 2023-Q4 HdL California Consensus Forecast