Sales tax revenues see uptick

2012-01-27 / Front Page

Simi lagging behind county, state but not concerned
By Carissa Marsh

According to the latest figures, Simi Valley saw modest growth in sales tax revenue during the third quarter of 2011, but the increase lagged behind the gains made countywide and across the state.

The data, analyzed by the city’s property and sales tax consultant, the HdL Companies, shows that local taxable sales made in Simi Valley during the months of July through September increased 3.3 percent over the same period a year ago.

By comparison, all of Ventura County rose 7.1 percent, while the Southern California region saw an 8.3 percent increase. Statewide taxable sales were up 8.6 percent.

When asked why Simi Valley didn’t fare as well—usually the city’s numbers are more in line with the rest of the county, region and state—Assistant City Manager Frank Catania admitted he didn’t have a good answer.

“We have so many accounts, we’re in the process of analyzing them,” said Catania, whose responsibilities include crafting the city budget. “We’ve been doing as well as or even better than Ventura County as a whole the last three or four quarters, and I can’t really tell you what caused this this time around.

“Folks in Simi Valley may just have not been in a state of mind to spend. This was for sales in July, August and September, which is generally a slow time for sales tax— people are on vacation or what have you. The bottom line is, I don’t have a good answer for you.”

According to the HdL Companies report, sales in Simi in most major revenue categories— general consumer goods, restaurants and hotels, building and construction, and food and drugs—remained relatively flat, while the business and industry sector saw a sharp decline.

But local losses were offset by higher fuel prices and a strong sales quarter for new motor vehicle dealers, the report said.

Specifically, contractors and electronics/appliance stores saw the biggest drop in sales tax revenue, down 16.2 percent and 20.2 percent, respectively.

On the other hand, there was a 20 percent increase in sales tax receipts from new motor vehicle dealers and a 17.4 percent increase from service stations.

While Simi Valley didn’t measure up to the rest of the region in the third quarter, which is the first quarter of the 2011-12 fiscal year, Catania said there’s still reason to be pleased with the numbers. Sales tax, a major source of revenue for the city, has done better than projected so far, he said.

“It doesn’t appear that we are going to have any bad news at midyear,” said Catania. He will present the City Council with a financial report in February, halfway through the fiscal year.

The most recent sales tax collections represent the fifth straight quarter of sales tax receipt year-over-year growth.

In addition, the quarterly results exceeded the city’s budget for that period by $19,099, while results for the first half of fiscal year 2011-12 exceeded the budget by $260,512.

“The good news is that sales tax continues to grow compared to the past few years, and we are above budget this year, which is also good news,” Catania said. “So in spite of how we compare to other regions in the state we are still showing positive growth, and that’s a great relief after having negative growth over a period of time.”

Looking at California as a whole, the state had its seventh consecutive quarterly gain, the HdL report said.

All categories were up, with receipts from higher fuel prices accounting for much of the statewide increase. Sales of new autos and consumer goods and from quick- and full-service restaurants also showed solid growth.

Although 2011-12 seems to be shaping up to be a period of strong sales tax recovery, most analysts believe that the pace of growth will slow in 2012- 13—they only disagree about how significant the slowdown will be.

Contributing to the economic uncertainty are additional state budget cuts, continued high unemployment, further declines in home values and unstable fuel prices.

Catania said he isn’t overly concerned that there will be a significant slowdown in Simi, but he said what happens at the state level trickles down. And of course the city is still waiting to see what the final impact will be from the elimination of redevelopment.

“There’s always a concern that the economy is going to take a turn for the worse considering the volatility that we’ve dealt with the past couple years, but . . . I haven’t seen anything in this city that would give me an indication that that’s likely to happen,” Catania said. “Anything that does happen like that would be more at the state and federal level, which would impact this city also.”

The meeting date for the midyear financial report has yet to be determined, but agendas are posted on the city’s website at www.simivalley.org.

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