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HomeMy WebLinkAboutStaff Report 14607 City of Palo Alto (ID # 14607) City Council Staff Report Meeting Date: 8/1/2022 Report Type: Information Reports City of Palo Alto Page 1 Title: Sales Tax Digest Summary Calendar 2022 Q1 From: City Manager Lead Department: Administrative Services DISCUSSION This report transmits information regarding the City of Palo Alto’s sales tax receipts for the first quarter (January through March) of 2022. This quarter marks two years from the first affected quarter due to the pandemic. There are two attachments to this report that provide further level of information: • City of Palo Alto Sales Tax Digest Summary (Attachment A) • California Legislative Update – June 2022 (Attachment B) The City’s sales tax cash receipts of $8.1 million for the first quarter (January to March 2022) is $1.3 million (19.5 percent) higher than the same quarter of the prior year (see Attachment A, Table 5). In contrast, the first quarter of 2022 compared to the same quarter of 2020 increased by $2.4 million (43.2 percent). The first quarter in 2020 saw the lowest receipts of any quarter in the past two years triggered by the start of the pandemic and economic downturn. Also, an important reminder is that the state offered small businesses 90-day extensions to pay their first quarter of 2020 taxes, and some companies made little or no payments in Q1 of 2020 due to this program. While Palo Alto experienced a 43.2% cash increase for the Q1 2022 compared to the Q1 2020, this includes the period of reduced payments, so the actual economic activity did not increase to the same extent. For the year ending in the first quarter of 2022, cash receipts (including county pools) for the City increased by 18.4 percent from the prior year. In comparison, the statewide increase was 23.4 percent while Northern California increased by 20.4 percent. After adjustments for non-period related payments, the overall economic sales tax activity (local business excluding pools) in Palo Alto for the year ending the first quarter of 2022 increased by 27.9 percent, while it increased 18.7 percent for the state and increased 9.3 percent in Northern California. The City of Palo Alto experienced a much larger decline in the City of Palo Alto Page 2 prior year compared to the state, which resulted in the larger increase when comparing year over year totals. . The first quarter of 2022 includes $1.5 million of sales tax receipts from the county pool. The City’s share of the county pool for this quarter is 6 percent, a marginal increase from 5.9 percent in the first quarter of 2021. County pools are primarily from online purchases from out of state companies, remote sellers who ship merchandise to California/County destinations, and private vehicle sales that are not directly allocated to a jurisdiction. County pools are allocated to local jurisdictions based on each jurisdiction’s’ share of total sales taxes. Attachments: • Attachment A: Palo Alto 2022Q1 Digest Summary • Attachment B: California Legislative Update City of Palo Alto Sales Tax Digest Summary Collections through May 2022 Sales January through March 2022 (2022Q1) www.avenuinsights.com (800) 800-8181 Page 1 California Overview For the year ending in first quarter of 2022, cash receipts increased 23.4% statewide, 20.4% in Northern California. However, when adjusted for non-period related payments, the overall economic sales tax activity for the year ending in first quarter of 2022 increased by 18.7% statewide, and up 9.3% in Northern California. City of Palo Alto For the year ending in the first quarter of 2022, sales tax cash receipts for the city increased by 18.4% from the prior year. However, when adjusted for non-period related payments, the overall economic sales tax activity in Palo Alto for the year ending in first quarter of 2022 increased by 27.9%. On a quarterly basis, sales tax cash receipts increased by 19.5% from Quarter 1 of 2021 to Quarter 1 of 2022. However, this increase includes late payment anomalies related to a state sales tax extension program (see note below). The period’s cash receipts include tax from business activity during the period, payments for prior periods and other cash adjustments. When adjusted for non-period related payments, the overall economic quarter over quarter sales tax activity (Q1 2021 to Q1 2022) in Palo Alto increased by 27.7%. As some general background on the relative influence of different growth factors this quarter, approximately 6.0% of Palo Alto’s 19.5% Q1 of 2022 over Q1 of 2021 increase might be attributed to inflation, based on increases in the Consumer Price Index, (CPI-U). An estimated 3.5% of Palo Alto’s 19.5% increase might be attributed to increased economic activity, based on changes in US Real GDP. Roughly – 4.0% is attributable to a decrease in payments from prior periods, due to Palo Alto taxpayers getting caught up with payments. The remaining roughly 14.0% is a combination of recovery and other factors (consumers, businesses and organizations getting back to Pre-Pandemic trends along with non-pandemic related business performance changes). Note that some of these factors are based on broad based data and thus, these growth factors should be treated as rough guidelines for economic activity changes this quarter. Regional Overview The first chart on page two shows adjusted economic benchmark year amounts, which means that it shows a full calendar year from the first quarter of 2021 through first quarter of 2022 compared to first quarter of 2020 through first quarter of 2021 (benchmark years are rolling annual comparisons through the current quarter). The decrease is different between the state and Palo Alto because the sales tax from businesses in Palo Alto were more impacted than those statewide. Attachment A City of Palo Alto www.avenuinsights.com (800) 800-8181 Page 2 $- $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 Quarterly Benchmark Year % of Total / % Change Palo Alto California Statewide S.F. Bay Area Sacramento Valley Central Valley South Coast Inland Empire North Coast General Retail 29.6 / 50.3 28.4 / 20.4 24.2 / 5.1 28.8 / 36.1 37.8 / 26.3 26.9 / 20.8 33.1 / 31.1 28.0 / -11.2 Food Products 15.4 / 66.2 19.9 / 25.5 20.4 / 11.6 15.5 / 24.6 14.1 / 22.2 22.0 / 34.1 17.9 / 15.5 17.1 / -11.1 Transportation 22.6 / 31.6 24.4 / 17.4 21.4 / -4.4 27.4 / 20.1 22.6 / 22.4 25.1 / 26.0 25.5 / 12.7 29.0 / -0.2 Business to Business 29.3 / 0.8 16.1 / 2.1 22.0 / -7.8 13.8 / 14.0 14.2 / 14.4 16.0 / 6.3 10.2 / -14.6 10.4 / 4.8 Misc/Other 3.1 / 3.5 11.2 / -0.6 12.1 / -13.2 14.5 / 17.6 11.3 / 9.6 10.1 / 1.4 13.3 / -3.7 15.5 / -13.8 Total 100.0 / 27.9 100.0 / 18.7 100.0 / -1.4 100.0 / 23.7 100.0 / 21.0 100.0 / 19.7 100.0 / 12.2 100.0 / -7.2 Palo Alto California Statewide S.F. Bay Area Sacramento Valley Central Valley South Coast Inland Empire North Coast Largest Segment Leasing Restaurants Restaurants Auto Sales - New Miscellaneous Retail Restaurants Miscellaneous Retail Auto Sales - New % of Total / % Change 19.2 / 23.6 13.8 / 39.9 14.1 / 29.8 11.5 / 12.4 13.9 / 95.3 15.6 / 49.1 15.3 / 89.6 11.6 / -8.8 2nd Largest Segment Auto Sales - New Auto Sales - New Auto Sales - New Miscellaneous Retail Department Stores Auto Sales - New Auto Sales - New Restaurants % of Total / % Change 18.6 / 27.2 11.9 / 12.7 11.1 / -11.4 11.0 / 95.9 10.8 / 6.1 12.9 / 23.5 11.6 / 11.7 10.7 / -12.5 3rd Largest Segment Restaurants Miscellaneous Retail OFFICE EQUIPMENT Restaurants Restaurants Department Stores Restaurants Department Stores % of Total / % Change 13.5 / 76.6 9.0 / 40.6 7.7 / -7.1 10.4 / 36.9 9.4 / 30.5 8.2 / 15.3 11.0 / 22.7 10.2 / -19.3 BENCHMARK YEAR 2022Q1 COMPARED TO BENCHMARK YEAR 2021Q1 CITY OF PALO ALTO ECONOMIC CATEGORY ANALYSIS FOR YEAR ENDED 1st Quarter 2022 ECONOMIC SEGMENT ANALYSIS FOR YEAR ENDED 1st Quarter 2022 Regional Overview Chart (Economic) Gross Historical Sales Tax Cash Receipts by Benchmark Year and Quarter (Before Adjustments) Attachment A Chart 1 Chart 2 City of Palo Alto www.avenuinsights.com (800) 800-8181 Page 3 Anderson Honda Macy's Department Store Stanford Health Care Apple Stores Magnussen's Toyota Tesla Audi Palo Alto Neiman Marcus Department Store Tesla Lease Trust Bloomingdale's Nordstrom Department Store Tiffany & Company Hengehold Trucks Richemont Union 76 Service Stations Hermes Rivian Automotive Varian Medical Systems HP Enterprise Services Shell Service Stations Volvo Cars Palo Alto Louis Vuitton Shreve & Co.Wilkes Bashford Lucile Packard Children's Hospital Leasing 19.2% Auto Sales -New 18.6% Restaurants 13.5% Department Stores 6.6%Office Equipment 5.2% Furniture/Appliance 5.1% All Other 31.6% Net Pools & Adjustments 21.0% Net Cash Receipts for Benchmark Year first Quarter 2022: $31,352,667 *Benchmark year (BMY) is the sum of the current and 3 previous quarters (2022Q1 BMY is sum of 2022 Q1, 2021 Q4, 2021 Q3, 2021 Q2) TOP 25 SALES/USE TAX CONTRIBUTORS The following list identifies Palo Alto’s Top 25 Sales/Use Tax contributors. The list is in alphabetical order and represents the year ended first quarter of 2022. The Top 25 Sales/Use Tax contributors generate 61.2% of Palo Alto’s total sales and use tax revenue. Attachment A Chart 3 City of Palo Alto www.avenuinsights.com (800) 800-8181 Page 4 $- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 Benchmark Year 2022Q1 Benchmark Year 2021Q1 Sales Tax from Largest Non-Confidential Sales Tax Segments (Economic) Attachment A Chart 4 City of Palo Alto www.avenuinsights.com (800) 800-8181 Page 5 Economic Category % 2022Q1 2021Q4 2021Q3 2021Q2 2021Q1 2020Q4 2020Q3 2020Q2 2020Q1 2019Q4 2019Q3 Business To Business 25.1% 2,032,592 1,969,438 1,762,093 1,652,745 1,765,043 2,060,217 2,022,479 1,851,601 2,000,210 2,375,333 1,942,593 Miscellaneous/Other 20.9% 1,695,756 1,682,102 1,702,838 1,620,383 1,467,407 1,679,573 1,322,172 997,005 1,227,541 1,693,416 1,516,049 General Retail 21.0% 1,700,135 2,273,543 1,798,257 1,803,297 1,262,756 1,746,602 1,300,645 660,300 1,450,820 2,579,412 2,416,101 Food Products 12.4% 1,007,507 1,075,263 970,873 897,222 619,501 668,640 650,152 439,540 990,266 1,256,287 1,205,242 Subtotal Economic (Local Business) 79.3% 6,435,991 7,000,346 6,234,061 5,973,646 5,114,708 6,155,031 5,295,448 3,948,447 5,668,837 7,904,447 7,079,986 Net Pools & Adjustments 20.7% 1,676,665 1,995,234 539,929 1,496,795 1,675,094 1,186,152 1,227,876 1,877,921 -2,287 1,937,461 1,477,413 Total Cash Receipts 100.0% 8,112,655 8,995,580 6,773,990 7,470,441 6,789,802 7,341,183 6,523,324 5,826,368 5,666,550 9,841,908 8,557,399 Economic Segment % 2022Q1 2021Q4 2021Q3 2021Q2 2021Q1 2020Q4 2020Q3 2020Q2 2020Q1 2019Q4 2019Q3 Miscellaneous/Other 48.9% 3,965,301 3,962,070 3,837,648 3,654,707 3,499,781 4,170,752 3,682,918 3,181,367 3,551,274 4,677,431 4,315,212 Restaurants 11.0% 891,656 941,683 857,066 785,086 527,203 552,176 545,728 342,533 867,027 1,105,719 1,073,522 Miscellaneous Retail 5.3% 429,200 676,701 407,467 456,685 327,729 479,041 326,777 108,953 280,493 499,697 384,397 Apparel Stores 4.9% 401,056 537,479 400,589 395,779 264,322 358,744 263,940 72,307 305,737 552,735 469,447 Department Stores 5.0% 403,604 525,295 388,703 384,763 237,473 315,453 186,316 29,842 245,948 552,822 431,717 Service Stations 2.4% 191,812 190,601 181,448 152,565 116,258 111,241 108,840 70,063 146,291 181,082 175,309 Food Markets 1.1% 91,633 106,315 87,521 89,669 71,321 89,396 81,580 77,803 102,026 118,952 104,192 Business Services 0.8% 61,729 60,203 73,620 54,393 70,621 78,228 99,348 65,579 170,042 216,011 126,190 Subtotal Economic (Local Business) 79.3% 6,435,991 7,000,346 6,234,061 5,973,646 5,114,708 6,155,031 5,295,448 3,948,447 5,668,837 7,904,447 7,079,986 Net Pools & Adjustments 20.7% 1,676,665 1,995,234 539,929 1,496,795 1,675,094 1,186,152 1,227,876 1,877,921 -2,287 1,937,461 1,477,413 Total Cash Receipts 100.0% 8,112,655 8,995,580 6,773,990 7,470,441 6,789,802 7,341,183 6,523,324 5,826,368 5,666,550 9,841,908 8,557,399 Historical Analysis by Calendar Quarter The chart above shows the categories and segments in quarterly economic basis amounts. The total amount is the net cash receipts, and it was obtained by adding up the categories/segments with the “Net Pools & Adjustments” amount. Attachment A Chart 5 City of Palo Alto www.avenuinsights.com (800) 800-8181 Page 6 Economic Category % 2022Q1 2021Q1 2020Q1 2019Q1 2018Q1 2017Q1 2016Q1 2015Q1 2014Q1 2013Q1 Business To Business 24.3% 7,617,663 7,554,150 8,287,264 7,420,749 6,165,462 5,317,271 4,919,417 4,159,698 3,826,166 4,086,958 Miscellaneous/Other 21.3% 6,687,843 5,250,996 5,780,899 7,517,321 6,387,471 6,138,103 5,805,795 5,357,777 8,683,787 5,044,215 General Retail 24.3% 7,625,742 4,989,212 8,438,706 8,571,709 8,413,734 8,590,616 8,036,424 8,083,498 8,269,497 8,190,986 Food Products 12.7% 3,990,234 2,400,702 4,758,375 4,862,470 4,726,632 4,603,963 4,550,695 4,267,423 3,903,474 3,547,073 Subtotal Economic (Local Business) 82.7% 25,921,482 20,195,060 27,265,245 28,372,249 25,693,300 24,649,953 23,312,331 21,868,395 24,682,924 20,869,232 Net Pools & Adjustments 17.3% 5,431,185 6,285,617 5,547,273 6,784,911 3,150,183 4,680,340 4,040,097 3,795,270 2,542,673 4,825,143 Total 100.0% 31,352,667 26,480,678 32,812,518 35,157,160 28,843,483 29,330,293 27,352,428 25,663,665 27,225,597 25,694,375 Economic Segment % 2022Q1 2021Q1 2020Q1 2019Q1 2018Q1 2017Q1 2016Q1 2015Q1 2014Q1 2013Q1 Miscellaneous/Other 49.2% 15,427,568 14,164,756 16,157,608 16,384,141 14,131,595 12,726,181 11,702,670 10,658,693 13,248,429 9,736,993 Restaurants 11.2% 3,509,904 1,986,961 4,200,287 4,281,863 4,110,727 4,004,906 3,958,600 3,713,187 3,438,478 3,090,057 Miscellaneous Retail 6.5% 2,031,480 1,260,960 1,557,472 1,656,404 1,720,866 2,275,210 1,673,995 1,514,666 1,950,451 1,851,598 Apparel Stores 5.6% 1,746,550 961,217 1,813,086 2,030,834 1,756,061 1,680,052 1,629,174 1,659,577 1,704,767 1,693,373 Department Stores 5.4% 1,702,364 769,134 1,684,162 1,932,036 2,079,948 2,100,526 2,298,559 2,395,177 2,449,817 2,461,177 Service Stations 2.3% 721,106 406,403 688,780 693,763 629,651 573,919 618,471 732,864 760,186 758,850 Food Markets 1.2% 380,328 323,518 445,875 453,701 510,430 503,066 505,442 482,242 414,066 410,236 Business Services 1.3% 402,182 322,112 717,974 939,507 754,022 786,093 925,420 711,989 716,730 866,948 Subtotal Economic (Local Business) 82.7% 25,921,482 20,195,060 27,265,245 28,372,249 25,693,300 24,649,953 23,312,331 21,868,395 24,682,924 20,869,232 Net Pools & Adjustments 17.3% 5,431,185 6,285,617 5,547,273 6,784,911 3,150,183 4,680,340 4,040,097 3,795,270 2,542,673 4,825,143 Total 100.0% 31,352,667 26,480,678 32,812,518 35,157,160 28,843,483 29,330,293 27,352,428 25,663,665 27,225,597 25,694,375 Historical Analysis by Calendar BMY from 2013Q1 to 2022Q1 The chart above shows the categories and segments in benchmark year economic basis amounts. The total amount is the net cash receipts, and it was obtained by adding up the categories/segments with the “Net Pools & Adjustments” amount. Benchmark year (BMY) is the sum of the current and 3 previous quarters (2022Q1 BMY is sum of 2022 Q1, 2021 Q4, 2021 Q3, 2021 Q2). Attachment A Chart 6 City of Palo Alto www.avenuinsights.com (800) 800-8181 Page 7 Ge n e r a l R e t a i l Fo o d P r o d u c t s Tr a n s p o r t a t i o n Bu s i n e s s t o B u s i n e s s Mi s c / O t h e r 20 2 2 / 1 T o t a l 20 2 1 / 1 T o t a l % C h g La r g e s t G a i n Se c o n d L a r g e s t Ga i n La r g e s t D e c l i n e Se c o n d L a r g e s t De c l i n e Campbell 15.6% 36.8% 22.3% -1.1% 35.7%2,413,744 2,072,244 16.5% Restaurants Electronic Equipment Office Equipment I.T. Infrastructure Cupertino 9.7% 50.9% 61.9% 5.0% -24.2%10,379,314 9,641,794 7.6% Office Equipment Restaurants Electronic Equipment Recreation Products Gilroy 2.5% 15.7% 41.8% 45.1% 4.1%4,013,236 3,389,610 18.4% Auto Sales - New Service Stations Furniture/Appliance Heavy Industry Los Altos 19.8% 30.2% 49.2% 12.2% 46.7%560,631 437,202 28.2% Restaurants Service Stations Bldg.Matls-Whsle Green Energy Los Gatos 26.8% 32.4% 8.1% 37.9% -26.8%1,340,447 1,146,657 16.9% Restaurants Furniture/Appliance Miscellaneous Other Food Processing Eqp Milpitas 18.1% 43.8% 99.4% 12.8% -38.8%5,446,262 4,378,976 24.4% Auto Sales - New Electronic Equipment Office Equipment Bldg.Matls-Whsle Morgan Hill 1.5% 21.7% 17.1% 7.6% -5.7%2,341,665 2,145,592 9.1% Service Stations Restaurants Bldg.Matls-Whsle Auto Parts/Repair Mountain View 7.3% 35.9% 56.1% 55.5% 1.7%4,444,950 3,345,939 32.8% Restaurants Business Services Bldg.Matls-Whsle Heavy Industry Palo Alto 32.7% 59.0% 18.8% 20.5% 14.3%6,478,603 5,071,547 27.7% Restaurants Leasing Drug Stores Miscellaneous Other San Jose 21.8% 29.9% 24.6% 9.6% 14.2%41,982,614 34,872,720 20.4% Restaurants Service Stations Business Services Light Industry Santa Clara 19.6% 46.5% 29.9% 16.1% 57.0%11,036,156 9,133,215 20.8% Office Equipment Auto Sales - New I.T. Infrastructure Leasing County of Santa Clara 46.9% 55.1% 10.9% 21.4% -8.1%1,143,984 850,586 34.5% Food Processing Eqp Bldg.Matls-Whsle Miscellaneous Retail Miscellaneous Other Saratoga 20.5% 49.4% 28.2% 138.2% 7.7%246,258 175,445 40.4% Restaurants Service Stations Bldg.Matls-Whsle Leasing Sunnyvale 107.6% 33.6% 27.0% 32.7% 5.3%6,932,312 4,884,947 41.9% Miscellaneous Retail Office Equipment Leasing Business Services Quarterly Analysis by Sales Tax Category: Change from 2021Q1 to 2022Q1 (Economic) Unlike the chart on page one which showed a ‘benchmark year’ through first quarter of 2022, the chart above shows a comparison of one quarter only – first quarter of 2022 to first quarter of 2021. This chart is for local ‘brick and mortar’ businesses and it excludes county pools and adjustments. Attachment A Chart 7 City of Palo Alto www.avenuinsights.com (800) 800-8181 Page 8 California Avenue % CHANGE QoQ 2022Q1 QE 2021Q1 QE 22Q1 % OF TOTAL 21Q1 % OF TOTAL FOOD PRODUCTS 61.0% 46,888 29,130 41.7%34.4% GENERAL RETAIL -6.1% 25,356 27,002 22.5%31.9% ALL OTHER 41.8% 40,313 28,429 35.8%33.6% TOTAL 33.1% 112,558 84,562 100.0% 100.0% El Camino Real and Midtown % CHANGE QoQ 2022Q1 QE 2021Q1 QE 22Q1 % OF TOTAL 21Q1 % OF TOTAL FOOD PRODUCTS 72.9% 138,018 79,815 43.5%34.8% GENERAL RETAIL 28.5% 36,890 28,708 11.6%12.5% ALL OTHER 18.1% 142,402 120,625 44.9%52.6% TOTAL 38.5% 317,310 229,148 100.0% 100.0% Greater Downtown % CHANGE QoQ 2022Q1 QE 2021Q1 QE 22Q1 % OF TOTAL 21Q1 % OF TOTAL FOOD PRODUCTS 76.8% 390,516 220,885 54.3%53.3% GENERAL RETAIL 98.7% 264,811 133,274 36.8%32.1% BUSINESS TO BUSINESS 8.1% 43,808 40,543 6.1%9.8% CONSTRUCTION -7.3% 9,506 10,253 1.3%2.5% MISCELLANEOUS 12.5% 7,543 6,707 1.0%1.6% TRANSPORTATION 14.2% 3,499 3,063 0.5%0.7% TOTAL 73.5% 719,683 414,725 100.0% 100.0% Stanford Shopping Center % CHANGE QoQ 2022Q1 QE 2021Q1 QE 22Q1 % OF TOTAL 21Q1 % OF TOTAL GENERAL RETAIL 42.1% 994,809 700,227 69.4%71.3% FOOD PRODUCTS 31.6% 129,305 98,220 9.0%10.0% ALL OTHER 68.1% 309,663 184,189 21.6%18.7% TOTAL 45.9% 1,433,777 982,636 100.0% 100.0% City of Palo Alto Geo Areas & Citywide Chart Data: Change from 2021Q1 to 2022Q1 (Economic) Attachment A Chart 8 City of Palo Alto www.avenuinsights.com (800) 800-8181 Page 9 Town And Country Shopping Center % CHANGE QoQ 2022Q1 QE 2021Q1 QE 22Q1 % OF TOTAL 21Q1 % OF TOTAL GENERAL RETAIL 17.8% 48,237 40,933 35.6%39.3% ALL OTHER 38.0% 87,376 63,298 64.4%60.7% TOTAL 30.1% 135,613 104,231 100.0% 100.0% All Other Geos combined with Balance of Jurisdiction % CHANGE QoQ 2022Q1 QE 2021Q1 QE 22Q1 % OF TOTAL 21Q1 % OF TOTAL BUSINESS TO BUSINESS 24.2% 1,933,595 1,556,522 35.4%35.8% GENERAL RETAIL 27.9% 1,442,376 1,127,909 26.4%25.9% TRANSPORTATION 10.5% 1,159,178 1,049,434 21.2%24.1% FOOD PRODUCTS 60.4% 839,273 523,128 15.4%12.0% MISCELLANEOUS -17.0% 53,111 63,997 1.0%1.5% CONSTRUCTION 30.8% 33,782 25,825 0.6%0.6% TOTAL 25.6% 5,461,315 4,346,815 100.0% 100.0% All Geo Area Totals Comparison 21Q4 & 20Q4 % CHANGE QoQ 2022Q1 QE 2021Q1 QE 22Q1 % OF TOTAL 21Q1 % OF TOTAL Balance of Jurisdiction 8.3% 2,742,375 2,531,514 50.2%58.2% Stanford Shopping Center 45.9% 1,433,777 982,636 26.3%22.6% Greater Downtown 73.5% 719,683 414,725 13.2%9.5% El Camino Real and Midtown 38.5% 317,310 229,148 5.8%5.3% Town And Country Shopping Center 30.1% 135,613 104,231 2.5%2.4% California Avenue 33.1% 112,558 84,562 2.1%1.9% TOTAL 25.6% 5,461,315 4,346,815 100.0% 100.0% Palo Alto citywide QE 21Q4 & 20Q4 % CHANGE QoQ 2022Q1 QE 2021Q1 QE 22Q1 % OF TOTAL 21Q1 % OF TOTAL BUSINESS TO BUSINESS 20.5% 2,067,376 1,716,119 31.9%33.8% GENERAL RETAIL 33.0% 1,700,135 1,277,854 26.2%25.2% TRANSPORTATION 18.8% 1,435,420 1,208,254 22.2%23.8% FOOD PRODUCTS 59.0% 1,007,507 633,530 15.6%12.5% MISCELLANEOUS 14.3% 226,246 197,964 3.5%3.9% CONSTRUCTION 10.8% 41,919 37,827 0.6%0.7% TOTAL 27.7% 6,478,603 5,071,547 100.0% 100.0% City of Palo Alto Geo Areas & Citywide Chart Data: Change from 2021Q1 to 2022Q1 (Economic) Cont. Attachment A Chart 9 City of Palo Alto www.avenuinsights.com (800) 800-8181 Page 10 FOOD PRODUCTS, 61.0% CHANGE, $46,888 , 41.7% TOTAL GENERAL RETAIL, -6.1% CHANGE, $25,356 , 22.5% TOTAL ALL OTHER, 41.8% CHANGE, $40,313 , 35.8% TOTAL California Avenue 2022Q1 SALES TAX AMOUNTS FOOD PRODUCTS, $29,130 , 34.4%TOTAL GENERAL RETAIL, $27,002 , 31.9%TOTAL ALL OTHER, $28,429 , 33.6%TOTAL California Avenue 2021Q1 SALES TAX AMOUNTS FOOD PRODUCTS, 72.9%CHANGE, $138,018 , 43.5%TOTAL GENERAL RETAIL, 28.5% CHANGE, $36,890 , 11.6%TOTAL ALL OTHER, 18.1% CHANGE, $142,402 , 44.9%TOTAL El Camino Real and Midtown 2022Q1 SALES TAX AMOUNTS FOOD PRODUCTS, $79,815 , 34.8%TOTAL GENERAL RETAIL, $28,708, 12.5%TOTAL ALL OTHER, $120,625 52.6%TOTAL El Camino Real and Midtown 2021Q1SALES TAX AMOUNTS City of Palo Alto Geo Area Pie Charts Attachment A Chart 10 City of Palo Alto www.avenuinsights.com (800) 800-8181 Page 11 FOOD PRODUCTS, 76.8%CHANGE, $390,516 , 54.3%TOTAL GENERAL RETAIL, 98.7% CHANGE, $264,811 , 36.8%TOTAL BUSINESS TO BUSINESS, 8.1% CHANGE, $43,808 , 6.1%TOTAL CONSTRUCTION, -7.3% CHANGE, $9,506 , 1.3%TOTAL MISCELLANEOUS, 12.5% CHANGE, $7,543 , 1.0%TOTAL TRANSPORTATION, 14.2% CHANGE, $3,499 , 0.5%TOTAL Greater Downtown 2022Q1SALES TAX AMOUNTS FOOD PRODUCTS, $220,885 , 53.3%TOTAL GENERAL RETAIL, $133,274 , 32.1%TOTAL BUSINESS TO BUSINESS, $40,543 , 9.8%TOTAL CONSTRUCTION, $10,253 , 2.5%TOTAL MISCELLANEOUS, $6,707 , 1.6%TOTAL TRANSPORTATION, $3,063 , 0.7%TOTAL Greater Downtown 2021Q1SALES TAX AMOUNTS GENERAL RETAIL $700,227 , 71.3%TOTAL FOOD PRODUCTS, $98,220 , 10.0%TOTAL ALL OTHER, $184,189 , 18.7%TOTAL Stanford Shopping Center 2021Q1 SALES TAX AMOUNTS GENERAL RETAIL, 42.1% CHANGE, $994,809 , 69.4%TOTAL FOOD PRODUCTS, 31.6% CHANGE, $129,305 , 9.0%TOTAL ALL OTHER, 68.1% CHANGE, $309,663 , 21.6%TOTAL Stanford Shopping Center 2022Q1 SALES TAX AMOUNTS City of Palo Alto Geo Areas Pie Charts Attachment A Chart 11 City of Palo Alto www.avenuinsights.com (800) 800-8181 Page 12 GENERAL RETAIL, 17.8%CHANGE, $48,237 , 35.6%TOTAL ALL OTHER, 38.0% CHANGE, $87,376 , Town And Country Shopping Center 2022Q1SALES TAX AMOUNTS GENERAL RETAIL, $40,933 , 39.3%TOTAL ALL OTHER, $63,298 , 60.7%TOTAL Town And Country Shopping Center 2021Q1 SALES TAX AMOUNTS BUSINESS TO BUSINESS, 24.2%CHANGE, $1,933,595 , 35.4%TOTAL GENERAL RETAIL, 27.9% CHANGE, $1,442,376, 26.4% TOTAL TRANSPORTATION, 10.5% CHANGE, $1,159,178, 21.2% TOTAL FOOD PRODUCTS, 60.4% CHANGE, $839,273 , 15.4%TOTAL MISCELLANEOUS, -17.0% CHANGE, $53,111 , 1.0%TOTAL CONSTRUCTION, 30.8% CHANGE, $33,782 , 0.6%TOTAL All Other Geos combined with Balance of Jurisdiction 2022Q1 SALES TAX AMOUNTS BUSINESS TO BUSINESS, $1,556,522 , 35.8%TOTAL GENERAL RETAIL, $1,127,909, 25.9% TOTAL TRANSPORTATION, $1,049,434, 24.1% TOTAL FOOD PRODUCTS, $523,128 , 12.0%TOTAL MISCELLANEOUS, $63,997 , 1.5%TOTAL CONSTRUCTION, $25,825 , 0.6%TOTAL All Other Geos combined with Balance of Jurisdiction 2021Q1 SALES TAX AMOUNTS City of Palo Alto Geo Area Pie Charts Attachment A Chart 12 City of Palo Alto www.avenuinsights.com (800) 800-8181 Page 13 Balance of Jurisdiction, 8.3%CHANGE, $2,742,375 , 50.2%TOTAL Stanford Shopping Center, 45.9% CHANGE, $1,433,777 , 26.3%TOTAL Greater Downtown, 73.5% CHANGE, $719,683 , 13.2%TOTAL El Camino Real and Midtown, 38.5% CHANGE, $317,310 , 5.8%TOTAL Town And Country Shopping Center, 30.1% CHANGE, $135,613 , 2.5%TOTAL California Avenue, 33.1% CHANGE, $112,558 , 2.1%TOTAL All Geo Area Totals 2022Q1 SALES TAX AMOUNTS Balance of Jurisdiction, $2,531,514 , 58.2%TOTAL Stanford Shopping Center, $982,636 , 22.6%TOTAL Greater Downtown, $414,725 , 9.5%TOTAL El Camino Real and Midtown, $229,148 , 5.3%TOTAL Town And Country Shopping Center, $104,231 , 2.4%TOTAL California Avenue, $84,562 , 1.9%TOTAL All Geo Area Totals 2021Q1 SALES TAX AMOUNTS BUSINESS TO BUSINESS, 20.5%CHANGE, $2,067,376 , 31.9%TOTAL GENERAL RETAIL, 33.0% CHANGE, $1,700,135 , 26.2%TOTAL TRANSPORTATION, 18.8% CHANGE, $1,435,420 , 22.2%TOTAL FOOD PRODUCTS, 59.0% CHANGE, $1,007,507 , 15.6%TOTAL MISCELLANEOUS, 14.3% CHANGE, $226,246 , 3.5%TOTAL CONSTRUCTION, 10.8% CHANGE, $41,919 , 0.6%TOTAL Palo Alto citywide 2022Q1 SALES TAX AMOUNTS BUSINESS TO BUSINESS, $1,716,119 , 33.8%TOTAL GENERAL RETAIL, $1,277,854 , 25.2%TOTAL TRANSPORTATION, $1,208,254 , 23.8%TOTAL FOOD PRODUCTS, $633,530 , 12.5%TOTAL MISCELLANEOUS, $197,964 , 3.9%TOTAL CONSTRUCTION, $37,827 , 0.7%TOTAL Palo Alto citywide 2021Q1 SALES TAX AMOUNTS City of Palo Alto Geo Area & Citywide Pie Charts Attachment A Chart 13 California Legislative Update June 16, 2022 This edition of our policy update provides information on a variety of bills by subject area and their current status in the legislative process. The legislature had several key deadlines in May, including the Appropriations Committees’ “Suspense Files” and the deadline for bills to pass out of their “House of Origin.” These deadlines have culled 4,000 legislative proposals pending action in January down to about 1,800. We are also seeing the State Budget take its final form, with a legislative deal struck at the beginning of June, which the legislature passed and sent to the Governor June 13. A budget bill junior will reflect the negotiated agreement between the legislature and Governor in the next few weeks, and the deadline for the Governor to sign the budget is June 30, however meeting the deadline only requires that a budget bill be signed, not that the final agreement has been reached. Below are details on key legislation as well as the state budget. We hope that this is helpful and please reach out to us with any questions. Government Relations Contact Fran.Mancia@avenuinsights.com / 559.288.7296 Administration AB 1944 (Lee): Local government: open and public meetings. Allows, until January 1, 2030, members of a legislative body of a local agency to use teleconferencing without identifying each teleconference location in the notice and agenda of the meeting or proceeding, and without making each teleconference location accessible to the public, under specified conditions. Status: Referred to the Senate Committees on Governmental Organization and the Judiciary. The author has recently stated he is not planning to move AB 1944 forward this year. Cal Cities Position: Support SB 379 (Wiener): Residential solar energy programs: permitting. This bill requires most cities and counties to adopt an automated, online permitting system for solar energy systems and energy storage. Status: Scheduled to be heard in the Assembly Committee on Local Government on June 15. Cal Cities Position: Watch Broadband AB 1934 (Rodriguez): Fairgrounds: broadband. This bill requires, by January 1, 2024, and upon appropriation by the legislature, the Office of Emergency Services to establish a grant program to provide fairs with funding to build and upgrade on- site broadband communications infrastructure. Status: Held on the Assembly Appropriations suspense file – dead. Cal Cities Position: Support Cannabis AB 2792 (Rubio, Blanca): Cannabis: excise tax: cultivation tax. This bill, for three years, beginning July 1, 2022, to July 1, 2025, inclusive, prohibits the California Department of Tax and Fee Administration (CDTFA) from including any mark- up amount in the average market price in an arm’s length transaction for purposes of the cannabis excise tax, and reduces the rate of the cannabis excise tax imposed on purchasers in a non-arm’s length transaction to 8%. Beginning July 1, 2022, to July 1, 2025, inclusive, this bill suspends the imposition of the excise tax upon purchasers of cannabis or cannabis products sold in this state by licensees eligible for a fee waiver or deferral pursuant to the program established by the Department of Cannabis Control under the California Cannabis Equity Act. The bill further suspends the imposition of the cultivation tax for three years from July 1, 2022, to July 1, 2025, inclusive, and discontinues the requirement that the CDTFA adjust the cultivation tax rate for inflation during the suspension. The bill requires a licensed distributor to collect the cannabis excise tax from the cannabis retailer on or before 90 days after the cannabis or cannabis product was sold or transferred by the cannabis retailer to the purchaser and requires the distributor to remit the cannabis excise taxes and cultivation taxes to the CDTFA quarterly on or before the last day of the month following the quarterly period in which the distributor collected the tax. Lastly, this bill would additionally state that any tax owed by a cultivator or cannabis retailer that has not been collected by a distributor is deemed a debt owed to the State of California by the cultivator or cannabis retailer. Status: Hearing postponed by the Assembly Committee on Business & Professions. Cal Cities Position: Watch SB 1074 (McGuire): Cannabis: excise tax: cultivation tax. This bill makes ineffective the cannabis cultivation tax and increases the cannabis excise tax rate that takes effect on different dates depending on whether the legislature appropriates funds to replace revenues decreased by the repeal of the tax. Status: Senate Inactive File Cal Cities Position: Watch SB 1281 (Bradford): Cannabis taxes. This bill reduces the cannabis excise tax rate from 15% to 5%, moves the point of collection for the excise tax from distributors to retailers, and makes ineffective the cannabis cultivation tax, effective January 1, 2023, among other changes. Status: Referred to the Assembly Committees on Revenue & Taxation and Business & Professions. Cal Cities Position: Watch SB 1293 (Bradford): Cannabis: taxation. This bill creates the Cannabis Equity Tax Credit, which allows a tax credit against the Personal Income and Corporation Tax equal to $10,000 per taxable year for an equity applicant or licensee. Status: Heard in the Revenue & Taxation Committee for testimony only on June 13. The committee will decide at a later date whether to move the measure forward. Cal Cities Position: Watch Economic Development AB 1864 (Gipson): Small business. Allows a credit under the Personal Income Tax Law and the Corporation Tax Law to a qualified small business employer equal to $434 per qualified employee Status: Testimony heard in the Assembly Committee on Revenue & Taxation. Dispensation of the measure has not yet been determined. Cal Cities Position: Watch AB 2035 (Villapudua): Taxation: credits: California New Employment Credit. Allows restaurants, theaters, and bars that are not considered small businesses to claim New Employment Credit. Status: Testimony heard in the Assembly Committee on Revenue & Taxation. Dispensation of the measure has not yet been determined. Cal Cities Position: Watch AB 2200 (Arambula): Online Jobs and Economic Support Resource Grant Program. This bill requires the Employment Development Department to award grants to fund “inclusive, cross- jurisdictional and innovative online platforms” that support employment and earning opportunities with a strong focus on underserved and economically challenged communities. Status: Held on the Assembly Appropriations Committee suspense file - dead. Cal Cities Position: Watch Finance SB 852 (Dodd): Climate resilience districts: formation: funding mechanisms. This bill allows cities and counties to create climate resilience districts and provides these new districts various financing powers. Status: Scheduled to be heard in the Assembly Committee on Local Government on June 15. Cal Cities Position: Pending Franchises AB 676 (Holden): Franchises. Makes various changes to the California Franchise Relations Act and the Franchise Investment Law and creates new requirements and prohibitions for franchise agreements. Status: Scheduled to be heard in the Senate Committee on Banking & Finance on June 22. Cal Cities Position: Watch Housing/Land Use AB 1748 (Seyarto): Exempt surplus land: regional housing need. Exempt from the Surplus Lands Act low density parcels located in jurisdictions that meet or exceed their 6th cycle Regional Housing Needs Allocation production targets for lower income households. Status: Failed passage in the Assembly Committee on Housing and Community Development – dead. Cal Cities Position: Support AB 2011 (Wicks): Affordable Housing and High End Road Jobs Act of 2022. Establishes the Affordable Housing and High Road Jobs Act of 2022, to create a ministerial, streamlined approval process for 100% affordable housing in commercially zoned areas and for mixed-income housing along commercial corridors. Status: Scheduled to be heard in the Senate Housing Committee on June 21. Cal Cities Position: Oppose AB 2097 (Friedman): Residential and commercial development: parking requirements. Prohibits public agencies from enforcing minimum automobile parking requirements for developments located close to public transit. Status: Scheduled to be heard in the Senate Governance and Finance Committee on June 15. Cal Cities Position: Oppose AB 2179 (Grayson): Development fees and charges: deferral. This bill extends, through June 30, 2022, (1) protections against eviction for nonpayment of rent, but only in cases where an application for emergency rental assistance to cover the unpaid rent was pending as of March 31, 2022; and (2) preemption of additional local protections against eviction for nonpayment of rent that were not in place on August 19, 2020. Status: Chaptered by the Secretary of State - Chapter 13, Statutes of 2022. Cal Cities Position: Watch AB 2234 (Rivas, Robert): Planning and zoning: housing: postentitlement phase permits. This bill requires a local agency to post information related to postentitlement phase permits for housing development projects, process those permits in a specified time period depending on the size of the housing development and establish a digital permitting system if the local agency meets a specific population threshold. Status: Scheduled to be heard in the Senate Governance and Finance Committee on June 15. Cal Cities Position: Oppose AB 2357 (Ting): Surplus Land. This bill makes changes to provision of the Surplus Land Act regarding public noticing and penalties and requires the Department of Housing and Community Development (HCD) to post on its website a list of all entities, including housing sponsors, that have notified HCD of their interest in acquiring surplus land for affordable housing. Status: Scheduled to be heard in the Senate Governance and Finance Committee on June 15. Cal Cities Position: Watch AB 2428 (Ramos): Mitigation Fee Act: fees for improvements: timeline for expenditure. The Mitigation Fee Act, requires a local agency that establishes, increases, or imposes a fee as a condition of approval of a development project to, among other things, determine a reasonable relationship between the fee’s use and the type of development project on which the fee is imposed. The Mitigation Fee Act also imposes additional requirements for fees imposed to provide for an improvement to be constructed to serve a development project, or which is a fee for public improvements, as specified, including that the fees be deposited in a separate capital facilities account or fund. This bill would require a local agency that requires a qualified applicant, as described, to deposit fees for improvements, as described, into an escrow account as a condition for receiving a conditional use permit or equivalent development permit to expend the fees within 5 years of the deposit. Status: Referred to the Assembly Committee on Local Government, however not heard – dead. Cal Cities Position: Watch SB 1067 (Portantino): Housing development projects: automobile parking requirements. This bill prohibits local governments from imposing parking minimums on a housing development near a major transit stop, as specified. Status: Scheduled to be heard in the Assembly Housing and Community Development Committee on June 15. Cal Cities Position: Oppose SB 1373 (Kamlager): Surplus land disposal. This bill extends by two years (until December 31, 2024) the deadlines in the Surplus Land Act to complete disposition of a property subject to an exclusive negotiating agreement for a local agency with a population of over two million people. Status: Scheduled to be heard in the Assembly Committee on Local Government on June 15. Cal Cities Position: Watch Privacy & Security AB 1711 (Seyarto): Privacy: breach. This bill requires that, when a person or business operating a system of records on behalf of a state or local agency is required to disclose a data breach pursuant to existing law, the state or local agency also disclose the breach by conspicuously posting the notice provided by the person or business pursuant to existing law on the agency’s website, if the agency maintains one, for a minimum of 30 days. Status: Referred to the Senate Judiciary Committee. Cal Cities Position: Watch Property Tax AB 1206 (Bennet): Property taxation: affordable housing: welfare exemption. Establishes a ceiling for development fees based on the median home price in a jurisdiction. Requires cities and counties that exceed this ceiling seek approval from the Department of Housing and Community Development. Status: From committee: Do pass and re-refer to Committee on Appropriations with recommendation: to Consent Calendar, (Ayes 5. Noes 0) Re-referred to the Assembly Appropriations Committee. Cal Cities Position: Watch AB 1707 (Boerner Horvath): Property tax postponement: Senior Citizens and Disabled Citizens Property Tax Postponement Fund. Requires that money be transferred from the General Fund to the Senior Citizens and Disabled Citizens Property Tax Postponement Fund when the Fund balance is less than $15 million. Status: Scheduled to be heard in the Senate Committee on Governance and Finance on June 15. Cal Cities Position: Watch AB 1839 (Choi): Property tax: tax-defaulted property sales. Modifies the process of a sale by agreement for a tax defaulted property and increases the claim period for excess proceeds resulting from a sale by public auction or sealed bid. Status: Failed passage in the Assembly Committee on Revenue & Taxation – dead. Cal Cities Position: Watch AB 1933 (Friedman): Property taxation: welfare exemption: nonprofit corporation: low- and moderate-income families. Expands the property tax welfare exemption to eligible nonprofit corporations that build and rehabilitate affordable housing units for sale, subject to certain limitations, to low-income families, as defined. Status: Referred to the Senate Committee on Governance and Finance. Cal Cities Position: Watch AB 2258 (Wood): Property Assessed Clean Energy program: wildfire safety improvements. Makes changes to the Property Assessed Clean Energy (PACE) Program related to wildfire safety improvements. Status: Referred to the Assembly Committee on Banking & Finance, however, was not heard – dead. Cal Cities Position: Watch AB 2651(Petrie-Norris) Property taxes: welfare exemption: community land trust. Extends the sunset date for the property tax welfare exemption for community land trusts from January 1, 2025, to January 1, 2027. Status: Referred to the Senate Committee on Governance and Finance. Cal Cities Position: Watch Sales and Use Taxes AB 1623 (Ramos) Personal income taxes: exclusion: uniformed services retirement pay: survivor benefit plan payments. This bill provides, for taxable years beginning January 1, 2023, and before January 1, 2033, an exclusion from gross income, under the Personal Income Tax Law, for retirement pay from the federal government for specified military services and annuity payments received from a U.S. Department of Defense Survivor Benefit Plan. This bill declares the objective of the exclusion and requires, by December 1, 2033, the Legislative Analyst, in collaboration with the Department of Veterans Affairs, to submit a report to the legislature on the exclusion’s effectiveness. Status: Held on the Assembly Appropriations Committee suspense file – dead. Cal Cities Position: Watch AB 1702 (Levine): Sales and Use Tax Law: exemptions: COVID-19 prevention and responses goods. Establishes a complete exemption under the Sales and Use Tax Law, until January 1, 2025, for "COVID-19 prevention and response goods." Status: Testimony heard in the Assembly Committee on Revenue and Taxation, awaiting action by the committee. Cal Cities Position: Oppose Unless Amended AB 1951 (Grayson): Sales and use tax: exemptions: manufacturing. This bill expands, from January 1, 2023, to January 1, 2028, the existing partial sales and use tax (SUT) exemption for manufacturing and research and development tangible personal property by making the expenditure a full exemption and removing the $200 million cap on qualifying purchases per individual purchaser. The state is prohibited from reimbursing any local agencies for lost SUT revenues due to this expansion. This bill declares the objective of expanding the exemption and requires the California Department of Tax and Fee Administration to prepare an annual report of specified metrics and requires the Legislative Analyst’s Office to prepare a report, no later than January 1, 2027, comparing the full exemption to the previous partial exemption. Status: Referred to the Senate Committee on Governance and Finance. Cal Cities Position: Concerns AB 2835 (Fong, Vince): Sales and use tax: exemptions: nonprofit blood centers. Authorizes a full exemption under the Sales and Use Tax Law for tangible personal property purchased by nonprofit organizations involved in blood banking. Status: Awaiting dispensation in the Assembly Committee on Revenue & Taxation. Cal Cities Position: Oppose Unless Amended AB 2887 (Garcia, Eduardo): Public resources: Sales and Use Tax Law: exclusions. Increases, from $100 million to $150 million, the limit on annual sales and use tax exclusions under the California Alternative Energy and Advanced Transportation Financing Authority Act. Status: Referred to the Senate Committee on Governance and Finance. Cal Cities Position: Concerns ACA 5 (Voepel): Motor vehicles: fuel taxes, sales and use taxes, and feed: expenditure restrictions. The California Constitution restricts the expenditure of revenues from taxes imposed by the state on fuels used in motor vehicles upon public streets and highways to street and highway and certain mass transit purposes. These restrictions do not apply to revenues from taxes or fees imposed under the Sales and Use Tax Law or the Vehicle License Fee Law. This measure would explicitly restrict the expenditure of all interest earned and other increments derived from the investment of those tax revenues and any proceeds from the lease or sale of real property acquired using those tax revenues only for the purposes described above. Status: Referred to the Assembly Committee on Transportation. Cal Cities Position: Watch SB 1041 (Atkins): Sales and use taxes: general exemptions. This bill removes the sunset date for the sales and use tax exemption for goods sold by thrift stores that are both located on a military installation and operated by a "military welfare society.” Status: Referred to the Assembly Committee on Revenue and Taxation. Cal Cities Position: Watch SB 1312 (Ochoa Bogh) Marketplace facilitators: passenger vehicle rental companies. The Sales and Use Tax Law requires every person desiring to engage in or conduct business as a seller within this state to file with the department an application for a permit for each place of business and requires every retailer selling tangible personal property for storage, use, or other consumption in this state to register with the department. Under existing law, the Marketplace Facilitator Act, a marketplace facilitator, as defined, is considered the seller, retailer, and dealer for each sale facilitated through its marketplace, as defined, for purposes of determining whether that marketplace facilitator is required to register with the department under the Sales and Use Tax Law or a law that imposes a fee administered pursuant to the Fee Collection Procedures Law. The act relieves the marketplace facilitator of liability for the taxes and fees in specified circumstances. This bill provides that marketplace operators are not facilitators for car rental services for Sales and Use Tax collections purposes. Status: Referred to the Assembly Committee on Appropriations. Cal Cities Position: Watch Short-Term Rentals AB 2328 (Flora) Local ordinances: home experience sharing. Current law defines "hosting platform" as a marketplace that is created for the primary purpose of facilitating the rental of a residential unit, as specified. This bill would prohibit a city or county from prohibiting or effectively prohibiting the use of property as a home experience sharing unit. The bill would define "home experience sharing unit" as a privately owned, noncommercial property or residential dwelling unit that is rented partially for a fee for a period of fewer than 18 continuous hours and that does not provide sleeping accommodations to transients. The bill would authorize a city or county to reasonably regulate home experience sharing units to protect the public’s health and safety, as specified. Status: Referred to the Assembly Committee on Local Government, however, never heard – dead. Cal Cities Position: Oppose Taxation AB 1626 (Nguyen): Motor Vehicle Fuel Tax Law: limitation on adjustment. Existing law, the Motor Vehicle Fuel Tax Law, administered by the California Department of Tax and Fee Administration, imposes a tax upon each gallon of motor vehicle fuel removed from a refinery or terminal rack in this state, entered into this state, or sold in this state, at a specified rate per gallon. Existing law requires the department to annually adjust the tax imposed by increasing the rates based on the California Consumer Price Index, as specified. This bill would limit the above-described annual adjustment to a maximum of 2% for rate adjustments made on or after July 1, 2023. Status: Never referred to an Assembly policy committee – dead. Cal Cities Position: None AB 1623 (Kiley): Motor Vehicle Fuel Tax Law: suspension of tax. Would suspend the imposition of the tax on motor vehicle fuels for 6 months. The bill would direct the Controller to transfer a specified amount from the General Fund to the Motor Vehicle Fuel Account in the Transportation Tax Fund. By transferring General Fund moneys to a continuously appropriated account, this bill would make an appropriation. Status: Heard in the Assembly Transportation Committee where hostile amendments were forced on the author who opted not to move forward with the bill – dead. Cal Cities Position: Watch AB 1708 (Kiley): Law enforcement: sharing data. Repeals the California Values Act and requires a law enforcement agency to cooperate with federal immigration officials by detaining a person for an immigration hold if a person has a qualifying criminal conviction or arrest. Status: Failed passage in the Assembly Committee on Public Safety – dead. Cal Cities Position: Watch State Budget In his May Budget Revision, Governor Newsom released a $300.7 billion spending plan and announced an estimated $97.5 billion state budget surplus. On June 1, legislative leaders announced a deal on their version of the budget, also including total spending of just over $300 billion, of which an estimated $235.5 billion is from the General Fund. The budget includes total reserves of $37.5 billion in 2022-23, including $3.2 billion in the regular operating reserve. General Fund spending in 2021-22 in the legislative budget plan is about $8 billion less than the Governor proposed, with higher non-recurring spending of a comparable amount in 2022-23. From a local government perspective, there are a number of key elements. ● $300 million to help local governments with resolving critical homeless encampments and transitioning individuals into permanent housing. ● Over $2 billion in affordable housing programs and financing packages. ● $10.9 billion multi-year transportation package including funding for transit, freight, active transportation, climate adaptation, and other purposes. ● $85 million in local law enforcement grants and $6 million at the Department of Justice (DOJ) per year for three years to address organized retail theft, $22 million for a fentanyl enforcement task force at DOJ and contraband interdiction at the California Military Department, and $25 million one- time for a gun buyback grant program. There are also significant state-level cannabis tax reforms. Over the last two years there has been substantial discussion of the “Gann Limit,” a voter enacted cap on state spending back in the 1970s. The legislature’s budget plan keeps the state budget under the Gann Limit by an estimated $20 billion in 2022-23. By including major infrastructure and COVID emergency-related spending, direct payments to families and businesses, and options suggested by the Legislative Analyst’s Office (such as updating an antiquated statutory definition of local subventions), the legislature’s plan aims to keep the state budget under this constitutional limit for at least two more years. Legislative Democrats have said they will work with the Governor to craft a proposed constitutional amendment to modernize the Gann Limit before the 2024 election. The legislature passed their budget June 13, committing to a negotiated budget agreement in a follow-up budget bill junior once the legislature and Governor have resolved their differences. The Governor must sign the 2022-23 Budget Act by June 30.