City’s Quarterly Sales Tax Earnings Show 9.3% Increase from Last Year, but Lose Ground to Online Sales

Pasadena’s sales tax receipts from October through December 2016 were up by 9.3 percent over fourth quarter receipts in 2015, boosted by a one-time use tax payment from equipment purchased as part of the construction of the GT-5 power plant.

A report from Pasadena Finance Director Matthew Hawkesworth said sales tax receipts also saw growth in the fine dining, quick-service restaurant, grocery and new motor vehicle categories, but declined in department store, electronics and appliance, family apparel and home furnishing sales.

The report also showed consumer goods leading in sales tax revenue by business groups, contributing 27 percent of sales tax receipts for the quarter, followed by restaurants which contributed 18 percent, and autos and transportation coming in third at 17 percent.

The report also indicated Pasadenans may be spending more eating out instead of buying groceries. Among the top 15 business types contributing sales taxes, fine dining recorded a 21.7 percent increase for the quarter compared to 2015, while grocery stores went up by only 6.6 percent, a little below quick-service restaurants that registered a 6.9 percent increase.

Hawkesworth said the City experienced a strong sales quarter for new motor vehicle dealers and auto leases. Listed among the top 25 producers for the quarter are such car companies as Honda of Pasadena, Rusnak Maserati, Tesla Motors, Thorson GMC Buick and Toyota of Pasadena.

New motor vehicle dealers also posted a big 20.3 percent increase in sales tax contributions to the City compared to 2015’s last quarter figures.

Looking into how online sales have been impacting sales tax receipts for Pasadena, the Finance Department report said local sales apparently declined, but the county-wide pool continued to see strong growth directly related to the continued shift toward online sales.

The report said although brick-and-mortar retail stores may be shrinking because consumers opt for the convenience of online shopping, warehouse “fulfillment centers” that fill in-state and in-county shipments from online orders are recording huge gains in sales taxes.

The report also said taxable sales for all of Los Angeles County grew 1.2 percent over 2015’s last quarter; the Southern California region was up 1.4 percent.

Statewide sales tax receipts for the fourth quarter rose 1.5 percent over 2015. On an annual basis, the statewide gain ended 2.1 percent higher than 2015.

With the large increase in the quarter, revenues are projected to meet the fiscal year 2017 budget projection of $35.5 million, the report said.