HomeMy WebLinkAboutStaff Report 2303-118312.Sales Tax Digest Summary Calendar 2022 Q4 (October 2022 – December 2022)
City Council
Staff Report
From: City Manager
Report Type: INFORMATION REPORTS
Lead Department: Administrative Services
Meeting Date: May 1 2023
Report #:2303-1183
TITLE
Sales Tax Digest Summary Calendar 2022 Q4 (October 2022 – December 2022)
DISCUSSION
This report transmits information regarding the City of Palo Alto’s sales tax receipts for the
fourth quarter (October to December) of 2022.
There are two attachments to this report that provide further and more detailed levels of
information:
1. City of Palo Alto Sales Tax Digest Summary 2022 Q4 (Attachment A)
2. California Legislative Update for Local Taxes (Attachment B)
The City’s sales tax cash receipts of $9.6 million for the fourth quarter (October to December
2022) is $594,000 (6.6%) higher than the same quarter of the prior year (see Attachment A,
Historical Analysis by Calendar Quarter). This increase includes late payment anomalies related
to the state sales tax extension program. When adjusted for nonperiod related payments, the
overall economic quarter over quarter sales tax activity (Q4 2021 to Q4 2022) in Palo Alto
increased by 7.2%. This is likely due to higher prices of goods and services as a result of inflation
and 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). Generally, the pace of the City’s recovery from the pandemic has lagged compared to
other regions. Growth for the state and Northern California reflects inflationary growth while
the growth reported for the City reflects both inflationary grown and lagged recovery.
For the year ending in the fourth quarter of 2022, cash receipts (including county pools) for the
City increased by 13.4% from the prior year. In comparison, statewide increased by 8.1% and
Northern California increased by 7.4%.
After adjustments for non-period related payments, the overall economic sales tax activity in
Palo Alto for the year increased by 14.8%, while it increased 2.5% for the state and decreased
5.9% in Northern California. Both the state and Northern California did not see as significant
sales tax decline compared to the City and overall recovered ahead of the City. The City’s
economic sales tax loss bottomed out at a 25.9% decline (calendar 2021 Q1), while the state
and Northern California experienced 17.4% and 18.8% declines, respectively, during the same
quarter.
The fourth quarter includes $1.8 million of sales tax receipts from the county pool. The City’ s
share of the county pool for this quarter is 6.2%, up from 5.9% in the fourth 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 - City of Palo Alto Sales Tax Digest Summary, 2022 Q4
Attachment B - California Legislative Update for Local Taxes
APPROVED BY:
Kiely Nose, Assistant City Manager
City of Palo Alto
Sales Tax Digest Summary
Collections through February 2023
Sales October through December 2022 (2022Q4)
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California Overview
For the year ending in fourth quarter of 2022, cash receipts increased 8.1% statewide, 7.4% in Northern
California. However, when adjusted for non-period related payments, the overall economic sales tax
activity for the year ending in fourth quarter of 2022 increased by 2.5% statewide, and down 5.9% in
Northern California.
City of Palo Alto
For the year ending in the fourth quarter of 2022, sales tax cash receipts for the city increased by 13.4%
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 fourth quarter of 2022 increased by 14.8%.
On a quarterly basis, sales tax cash receipts increased by 6.6% from Quarter 4 of 2021 to Quarter 4 of
2022. However, this increase includes late payment anomalies related to a state sales tax extension
program. 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 (Q4 2021 to Q4 2022) in Palo Alto increased by 7.2%.
A large, one-time audit decision of -$612,000 negatively impacted the city’s cash receipts this quarter.
Without the correction, sales tax cash receipts would have increased by approximately 12.4% from
Quarter 2 of 2021 to Quarter 2 of 2022. Approximately 3.8% of that adjusted 12.4% Q2 of 2022 over Q2
of 2021 increase might be attributed to inflation, based on increases in the Consumer Price Index, (CPI-
U). Very little of Palo Alto’s adjusted 12.4% increase might be attributed to increased economic activity,
based on changes in US Real GDP. Roughly 1.7% is attributable to a decrease in payments from prior
periods, due to Palo Alto taxpayers getting caught up with payments. The remaining roughly 6.9% 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 fourth quarter of 2021 through fourth quarter of 2022 compared to
fourth quarter of 2020 through fourth 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.
City of Palo Alto
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% of Total / % Change Palo Alto California
Statewide S.F. Bay Area Sacramento
Valley Central Valley South Coast Inland Empire North Coast
General Retail 27.4 / 12.2 27.8 / -0.7 23.4 / -18.7 27.9 / 1.9 36.3 / -1.8 26.2 / 2.4 32.7 / 14.9 25.5 / -23.4
Food Products 16.8 / 31.1 20.0 / 4.9 20.5 / -12.9 15.9 / 9.4 14.2 / 4.6 22.3 / 9.5 17.2 / 13.9 17.6 / -7.7
Transportation 19.5 / -2.5 24.9 / 6.2 21.4 / -15.8 27.5 / 5.6 23.2 / 6.1 25.8 / 10.5 25.8 / 24.6 30.4 / -6.2
Business to Business 32.7 / 27.1 16.2 / 1.7 22.5 / -14.4 14.4 / 12.4 15.2 / 10.9 15.9 / 4.2 10.7 / 25.0 10.8 / -1.2
Misc/Other 3.6 / -14.2 11.1 / -0.6 12.2 / -17.1 14.3 / 6.2 11.2 / 3.2 9.7 / 0.2 13.7 / 19.4 15.7 / -11.6
Total 100.0 / 14.8 100.0 / 2.5 100.0 / -15.8 100.0 / 6.1 100.0 / 3.2 100.0 / 6.0 100.0 / 18.7 100.0 / -11.9
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 Service Stations
% of Total / % Change 20.7 / 24.6 14.1 / 8.4 14.6 / -8.4 11.2 / 1.2 13.4 / 0.5 16.2 / 13.6 16.0 / 24.9 12.1 / 13.5
2nd Largest Segment Auto Sales -
New
Auto Sales -
New
Auto Sales -
New Restaurants Department
Stores
Auto Sales -
New Restaurants Auto Sales -
New
% of Total / % Change 15.2 / -8.5 11.6 / 1.4 10.2 / -22.8 10.8 / 11.4 11.1 / 2.2 13.1 / 8.7 10.5 / 16.6 11.1 / -18.3
3rd Largest Segment Restaurants Miscellaneous
Retail
Department
Stores
Miscellaneous
Retail Restaurants Department
Stores
Auto Sales -
New Restaurants
% of Total / % Change 15.0 / 33.5 9.1 / 4.3 8.0 / -8.1 10.5 / 2.4 9.3 / 5.0 8.1 / 3.0 10.4 / 9.7 11.1 / -6.6
ECONOMIC CATEGORY ANALYSIS FOR YEAR ENDED 4th Quarter 2022
ECONOMIC SEGMENT ANALYSIS FOR YEAR ENDED 4th Quarter 2022
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
Quarterly Benchmark Year
Regional Overview Chart (Economic)
BENCHMARK YEAR 2022Q4 COMPARED TO BENCHMARK YEAR 2021Q 4
Gross Historical Sales Tax Cash Receipts by Benchmark Year and Quarter (Before Adjustments)
City of Palo Alto
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Anderson Honda Macy's Department Store Stanford Health Care
Apple Stores Magnussen's Toyota of Palo Alto Tesla
Arco AM/PM Mini Marts Neiman Marcus Tesla Lease Trust
Audi Palo Alto Nordstrom Department Store Tiffany & Company
Bloomingdale's Richemont Union 76 Service Stations
Hengehold Trucks Rivian Automotive Valero Service Stations
Hermes Shell Service Stations Varian Medical Systems
HP Enterprise Services Shreve & Co.Volvo Cars Palo Alto
Louis Vuitton
Auto Sales -New
15.2%
Restaurants
15.0%
Office Equipment
7.0%
Apparel Stores
6.6%
Department Stores
6.3%
All Other
49.9%
Net Pools & Adjustments
20.5%
Net Cash Receipts for Benchmark Year fourth Quarter 2022: $34,043,639
*Benchmark year (BMY) is the sum of the current and 3 previous quarters (2022Q4 BMY is sum of 2022 Q4, 2022 Q3, 2022 Q2, 2022 Q1)
TOP 25 SALES/USE TAX CONTRIBUTORS
The following list identifies Palo Alto’s Top 25 Sales/Use Tax contributors. The list is in alphabetical order
and represents the year ended fourth quarter of 2022. The Top 25 Sales/Use Tax contributors generate
61.4% of Palo Alto’s total sales and use tax revenue.
City of Palo Alto
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$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
$4,500,000
$5,000,000
Benchmark Year 2022Q4 Benchmark Year 2021Q4
Sales Tax from Largest Non-Confidential Sales Tax Segments (Economic)
City of Palo Alto
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Economic Category % 2022Q4 2022Q3 2022Q2 2022Q1 2021Q4 2021Q3 2021Q2 2021Q1 2020Q4 2020Q3 2020Q2
Business To Business 26.8%2,571,178 2,194,817 2,095,020 2,031,199 2,136,501 1,689,561 1,559,814 1,700,725 1,937,072 1,909,078 1,851,601
Miscellaneous/Other 15.8%1,517,005 1,597,816 1,724,861 1,701,538 1,687,189 1,812,731 1,743,358 1,558,859 1,777,635 1,480,228 997,005
General Retail 24.0%2,305,038 1,802,777 1,920,316 1,639,417 2,282,253 1,687,461 1,740,666 1,153,240 1,608,823 1,143,497 660,300
Food Products 13.1%1,260,287 1,230,824 1,227,240 1,018,577 1,083,309 999,729 912,939 635,705 674,469 651,271 439,540
Subtotal Economic (Local Business)79.8%7,653,508 6,826,234 6,967,438 6,390,731 7,189,252 6,189,482 5,956,778 5,048,529 5,997,999 5,184,075 3,948,447
Net Pools & Adjustments 20.2%1,935,580 1,862,181 686,044 1,721,924 1,806,328 584,508 1,513,663 1,741,273 1,343,184 1,339,250 1,877,921
Total Cash Receipts 100.0%9,589,088 8,688,414 7,653,481 8,112,655 8,995,580 6,773,990 7,470,441 6,789,802 7,341,183 6,523,324 5,826,368
Economic Segment % 2022Q4 2022Q3 2022Q2 2022Q1 2021Q4 2021Q3 2021Q2 2021Q1 2020Q4 2020Q3 2020Q2
Miscellaneous/Other 46.8%4,490,992 4,087,158 4,008,008 3,949,786 3,969,954 3,752,178 3,570,610 3,406,995 3,982,753 3,567,251 3,181,367
Restaurants 11.6%1,114,637 1,102,248 1,093,944 902,707 947,771 884,911 799,544 540,244 557,662 546,924 342,533
Miscellaneous Retail 5.7%545,797 381,616 479,710 432,956 679,381 412,016 514,516 338,032 489,417 329,678 108,953
Apparel Stores 5.6%538,573 435,730 495,508 392,724 540,782 406,274 398,447 264,318 365,627 265,136 72,307
Department Stores 5.6%533,032 423,601 454,349 367,144 525,295 388,703 384,763 237,522 315,453 186,316 29,842
Service Stations 2.2%215,640 233,387 250,715 191,755 190,610 181,460 157,268 116,258 111,242 108,840 70,063
Food Markets 1.2%116,810 99,811 104,253 91,634 108,203 90,773 89,773 74,397 89,739 81,580 77,803
Business Services 1.0%98,027 62,683 80,950 62,025 227,256 73,169 41,858 70,763 86,107 98,350 65,579
Subtotal Economic (Local Business)79.8%7,653,508 6,826,234 6,967,438 6,390,731 7,189,252 6,189,482 5,956,778 5,048,529 5,997,999 5,184,075 3,948,447
Net Pools & Adjustments 20.2%1,935,580 1,862,181 686,044 1,721,924 1,806,328 584,508 1,513,663 1,741,273 1,343,184 1,339,250 1,877,921
Total Cash Receipts 100.0%9,589,088 8,688,414 7,653,481 8,112,655 8,995,580 6,773,990 7,470,441 6,789,802 7,341,183 6,523,324 5,826,368
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 recei pts, and it was obtained by
adding up the categories/segments with the “Net Pools & Adjustments” amount.
City of Palo Alto
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Economic Category % 2022Q4 2021Q4 2020Q4 2019Q4 2018Q4 2017Q4 2016Q4 2015Q4 2014Q4 2013Q4
Business To Business 27.2%9,260,981 7,286,150 7,841,120 8,527,467 6,310,094 5,765,938 5,070,150 4,816,050 4,229,960 4,345,099
Miscellaneous/Other 19.1%6,512,441 6,818,252 5,644,912 7,306,496 7,675,702 6,512,996 6,341,684 5,870,766 5,238,824 8,554,047
General Retail 22.7%7,711,363 6,865,025 4,443,550 7,705,885 8,252,239 8,101,232 8,405,122 8,004,603 8,043,904 7,971,020
Food Products 14.0%4,764,903 3,635,859 2,786,896 4,918,067 4,834,276 4,678,134 4,623,448 4,477,229 4,203,235 3,851,007
Subtotal Economic (Local Business)83.0%28,249,687 24,605,286 20,716,478 28,457,915 27,072,311 25,058,300 24,440,405 23,168,648 21,715,924 24,721,173
Net Pools & Adjustments 17.0%5,793,952 5,424,527 4,640,947 6,403,208 6,376,669 4,919,736 4,008,398 3,910,626 3,986,209 3,940,092
Total 100.0%34,043,639 30,029,814 25,357,425 34,861,122 33,448,980 29,978,035 28,448,802 27,079,275 25,702,133 28,661,265
Economic Segment % 2022Q4 2021Q4 2020Q4 2019Q4 2018Q4 2017Q4 2016Q4 2015Q4 2014Q4 2013Q4
Miscellaneous/Other 49.6%16,874,802 14,915,305 14,173,249 16,823,007 15,194,506 13,632,458 12,398,186 11,601,638 10,535,865 13,987,602
Restaurants 12.5%4,241,753 3,176,670 2,339,624 4,353,618 4,241,632 4,068,940 4,022,319 3,891,360 3,664,315 3,323,442
Miscellaneous Retail 5.5%1,875,473 1,945,372 1,208,603 1,611,157 1,675,512 1,682,474 2,314,810 1,630,195 1,546,933 1,434,238
Apparel Stores 5.5%1,871,251 1,609,800 1,004,225 1,912,604 1,979,846 1,741,347 1,660,190 1,657,179 1,660,838 1,630,187
Department Stores 5.2%1,778,127 1,536,282 777,559 1,795,157 1,980,754 2,066,909 2,143,430 2,366,679 2,364,448 2,449,696
Service Stations 2.6%891,841 645,596 436,436 700,712 697,083 613,070 551,153 644,027 768,488 760,187
Business Services 0.9%303,932 413,141 419,690 817,559 834,069 748,497 843,203 872,811 707,311 674,668
Food Markets 1.2%412,508 363,121 357,092 444,100 468,909 504,604 507,114 504,759 467,726 461,152
Subtotal Economic (Local Business)83.0%28,249,687 24,605,286 20,716,478 28,457,915 27,072,311 25,058,300 24,440,405 23,168,648 21,715,924 24,721,173
Net Pools & Adjustments 17.0%5,793,952 5,424,527 4,640,947 6,403,208 6,376,669 4,919,736 4,008,398 3,910,626 3,986,209 3,940,092
Total 100.0%34,043,639 30,029,814 25,357,425 34,861,122 33,448,980 29,978,035 28,448,802 27,079,275 25,702,133 28,661,265
Historical Analysis by Calendar BMY from 2013Q4 to 2022Q4
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
(2022Q4 BMY is sum of 2022 Q4, 2022 Q3, 2022 Q2, 2022 Q1).
City of Palo Alto
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Campbell 1.1%11.8%-1.5%64.4%6.8%3,023,861 2,648,352 14.2%Light Industry Restaurants Miscellaneous Retail Auto Sales - Used
Cupertino -11.8%12.4%25.4%-44.0%-40.1%10,068,546 16,805,343 -40.1%Restaurants Service Stations Office Equipment I.T. Infrastructure
Gilroy 0.1%4.3%7.1%-9.7%-10.9%4,649,553 4,628,454 0.5%Auto Sales - New Department Stores I.T. Infrastructure Misc. Vehicle Sales
Los Altos -27.7%2.8%9.3%3.9%-9.4%636,393 667,611 -4.7%Restaurants Service Stations Recreation Products Light Industry
Los Gatos 9.6%23.5%-7.0%-6.1%11.8%1,632,289 1,490,491 9.5%Restaurants Furniture/Appliance Auto Sales - New Miscellaneous Retail
Milpitas -5.1%17.7%38.6%32.9%-9.4%6,595,785 5,625,844 17.2%Office Equipment Auto Sales - New Miscellaneous Retail Light Industry
Morgan Hill 2.6%-18.2%8.5%-15.3%-18.5%2,639,438 2,737,611 -3.6%Service Stations Auto Sales - New Food Markets Light Industry
Mountain View -15.6%17.8%23.0%-17.4%-1.3%5,272,210 5,340,713 -1.3%Restaurants Auto Sales - New Business Services Miscellaneous Retail
Palo Alto 0.9%16.1%-8.9%24.2%-26.8%7,848,525 7,323,799 7.2%Office Equipment Leasing Miscellaneous Retail Auto Sales - New
San Jose -1.1%12.3%13.5%33.6%-1.5%60,148,190 55,065,184 9.2%Office Equipment Auto Sales - New Miscellaneous Retail Apparel Stores
Santa Clara -3.2%19.9%26.4%-1.7%5.0%13,004,559 12,383,669 5.0%Auto Sales - New Restaurants I.T. Infrastructure Miscellaneous Retail
County of Santa Clara 2.7%-10.5%-3.7%6.8%9.8%1,202,620 1,197,213 0.5%Heavy Industry Bldg.Matls-Whsle Food Processing Eqp Auto Parts/Repair
Saratoga -26.5%-0.5%6.4%84.9%-25.5%295,840 298,131 -0.8%Business Services Light Industry Miscellaneous Retail Food Processing Eqp
Sunnyvale 23.5%15.1%13.2%11.3%38.0%8,013,428 6,859,535 16.8%Department Stores Office Equipment Heavy Industry Miscellaneous Retail
Quarterly Analysis by Sales Tax Category: Change from 2021Q4 to 2022Q4 (Economic)
Unlike the chart on page one which showed a ‘benchmark year’ through fourth quarter of 2022, the chart above shows a comparison of one quarter only – fourth
quarter of 2022 to fourth quarter of 2021. This chart is for local ‘brick and mortar’ businesses and it excludes county pools and adjustments.
City of Palo Alto
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California Avenue % CHANGE QoQ 2022Q4 QE 2021Q4 QE 22Q4 % OF TOTAL 21Q4 % OF TOTAL
FOOD PRODUCTS 22.4%61,334 50,093 49.8%44.8%
GENERAL RETAIL -15.9%20,238 24,072 16.4%21.5%
ALL OTHER 10.9%41,697 37,611 33.8%33.6%
TOTAL 10.3%123,269 111,776 100.0%100.0%
El Camino Real and Midtown % CHANGE QoQ 2022Q4 QE 2021Q4 QE 22Q4 % OF TOTAL 21Q4 % OF TOTAL
FOOD PRODUCTS 10.5%161,847 146,412 46.2%42.2%
GENERAL RETAIL 2.1%39,138 38,329 11.2%11.1%
ALL OTHER -7.7%149,465 161,886 42.6%46.7%
TOTAL 1.1%350,450 346,627 100.0%100.0%
Greater Downtown % CHANGE QoQ 2022Q4 QE 2021Q4 QE 22Q4 % OF TOTAL 21Q4 % OF TOTAL
FOOD PRODUCTS 16.6%485,755 416,570 52.6%49.6%
GENERAL RETAIL 37.1%383,255 279,601 41.5%33.3%
BUSINESS TO BUSINESS -70.6%35,094 119,500 3.8%14.2%
CONSTRUCTION -14.9%10,165 11,943 1.1%1.4%
MISCELLANEOUS -43.5%4,889 8,655 0.5%1.0%
TRANSPORTATION 24.0%3,750 3,023 0.4%0.4%
TOTAL 10.0%922,907 839,292 100.0%100.0%
Stanford Shopping Center % CHANGE QoQ 2022Q4 QE 2021Q4 QE 22Q4 % OF TOTAL 21Q4 % OF TOTAL
GENERAL RETAIL -19.9%1,150,892 1,437,359 74.4%75.9%
FOOD PRODUCTS 4.7%148,678 142,044 9.6%7.5%
ALL OTHER -21.3%246,968 313,637 16.0%16.6%
TOTAL -18.3%1,546,539 1,893,040 100.0%100.0%
City of Palo Alto Geo Areas & Citywide Chart Data: Change from 2021Q4 to 2022Q4 (Economic)
City of Palo Alto
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Town And Country Shopping Center % CHANGE QoQ 2022Q4 QE 2021Q4 QE 22Q4 % OF TOTAL 21Q4 % OF TOTAL
FOOD PRODUCTS 12.6%105,285 93,523 56.9%54.4%
GENERAL RETAIL 2.4%72,674 70,974 39.3%41.3%
ALL OTHER -5.5%7,110 7,524 3.8%4.4%
TOTAL 7.6%185,069 172,021 100.0%100.0%
All Other Geos combined with Balance of Jurisdiction % CHANGE QoQ 2022Q4 QE 2021Q4 QE 22Q4 % OF TOTAL 21Q4 % OF TOTAL
BUSINESS TO BUSINESS 25.6%2,539,070 2,022,323 39.0%32.9%
GENERAL RETAIL -9.8%1,730,113 1,917,420 26.5%31.2%
TRANSPORTATION -6.2%1,129,540 1,204,573 17.3%19.6%
FOOD PRODUCTS 15.7%1,039,984 898,543 16.0%14.6%
MISCELLANEOUS -24.4%47,882 63,370 0.7%1.0%
CONSTRUCTION -15.2%30,176 35,605 0.5%0.6%
TOTAL 6.1%6,516,763 6,141,834 100.0%100.0%
All Geo Area Totals Comparison 22Q4 & 21Q4 % CHANGE QoQ 2022Q4 QE 2021Q4 QE 22Q4 % OF TOTAL 21Q4 % OF TOTAL
Balance of Jurisdiction 21.9%3,388,529 2,779,078 52.0%45.2%
Stanford Shopping Center -18.3%1,546,539 1,893,040 23.7%30.8%
Greater Downtown 10.0%922,907 839,292 14.2%13.7%
El Camino Real and Midtown 1.1%350,450 346,627 5.4%5.6%
Town And Country Shopping Center 7.6%185,069 172,021 2.8%2.8%
California Avenue 10.3%123,269 111,776 1.9%1.8%
TOTAL 6.1%6,516,763 6,141,834 100.0%100.0%
Palo Alto citywide QE 22Q4 & 21Q4 % CHANGE QoQ 2022Q4 QE 2021Q4 QE 22Q4 % OF TOTAL 21Q4 % OF TOTAL
BUSINESS TO BUSINESS 24.2%2,756,562 2,219,376 35.1%30.3%
GENERAL RETAIL 0.9%2,305,038 2,283,693 29.4%31.2%
TRANSPORTATION -8.9%1,307,454 1,435,594 16.7%19.6%
FOOD PRODUCTS 16.1%1,260,287 1,085,805 16.1%14.8%
MISCELLANEOUS -29.2%183,393 259,116 2.3%3.5%
CONSTRUCTION -11.0%35,791 40,215 0.5%0.5%
TOTAL 7.2%7,848,525 7,323,799 100.0%100.0%
City of Palo Alto Geo Areas & Citywide Chart Data: Change from 2021Q4 to 2022Q4 (Economic) Cont.
City of Palo Alto
www.avenuinsights.com (800) 800-8181 Page 10
FOOD PRODUCTS,
22.4% CHANGE, $61,334 ,
49.8% TOTAL
GENERAL RETAIL, -15.9% CHANGE,
$20,238 , 16.4% TOTAL
ALL OTHER,
10.9% CHANGE, $41,697 ,
33.8% TOTAL
California Avenue 2022Q4 SALES TAX AMOUNTS
FOOD PRODUCTS, $50,093 ,
44.8%TOTAL
GENERAL RETAIL,
$24,072 , 21.5%TOTAL
ALL OTHER, $37,611 ,
33.6%TOTAL
California Avenue 2021Q4 SALES TAX AMOUNTS
FOOD PRODUCTS,
10.5%CHANGE, $161,847 ,
46.2%TOTAL
GENERAL RETAIL, 2.1% CHANGE,
$39,138 , 11.2%TOTAL
ALL OTHER,
-7.7% CHANGE,
$149,465 ,
42.6%TOTAL
El Camino Real and Midtown 2022Q4 SALES TAX AMOUNTS
FOOD PRODUCTS, $146,412 ,
42.2%TOTAL
GENERAL RETAIL,
$38,329, 11.1%TOTAL
ALL OTHER, $161,886
46.7%TOTAL
El Camino Real and Midtown 2021Q4 SALES TAX AMOUNTS
City of Palo Alto Geo Area Pie Charts
City of Palo Alto
www.avenuinsights.com (800) 800-8181 Page 11
FOOD PRODUCTS,
16.6%CHANGE, $485,755 ,
52.6%TOTAL
GENERAL RETAIL,
37.1% CHANGE,
$383,255 ,
41.5%TOTAL
BUSINESS TO BUSINESS,
-70.6% CHANGE, $35,094 ,
3.8%TOTAL
CONSTRUCTION,
-14.9 CHANGE, $10,165 ,
1.1%TOTAL
MISCELLANEOUS, -43.5% CHANGE,
$4,889 , 0.5%TOTAL TRANSPORTATION,
24.0% CHANGE, $3,750 ,
0.4%TOTAL
Greater Downtown 2022Q4 SALES TAX AMOUNTS
FOOD PRODUCTS,
$416,570 , 49.6%TOTAL
GENERAL RETAIL,
$279,601 , 33.3%TOTAL
BUSINESS TO BUSINESS,
$119,500 , 14.2%TOTAL
CONSTRUCTION, $11,943 ,
1.4%TOTAL
MISCELLANEOUS,
$8,655 , 1.0%TOTAL TRANSPORTATION, $3,023 ,
0.4%TOTAL
Greater Downtown 2021Q4 SALES TAX AMOUNTS
GENERAL RETAIL
$1,437,359 ,
75.9%TOTAL
FOOD PRODUCTS, $142,044 ,
7.5%TOTAL
ALL OTHER, $313,637 ,
16.6%TOTAL
Stanford Shopping Center 2021Q4 SALES TAX AMOUNTS
GENERAL RETAIL,
-19.9% CHANGE, $1,150,892 ,
74.4%TOTAL
FOOD PRODUCTS,
4.7% CHANGE,
$148,678 , 9.6%TOTAL
ALL OTHER, -21.3% CHANGE,
$246,968 , 16.0%TOTAL
Stanford Shopping Center 2022Q4 SALES TAX AMOUNTS
City of Palo Alto Geo Areas Pie Charts
City of Palo Alto
www.avenuinsights.com (800) 800-8181 Page 12
FOOD PRODUCTS,
12.6%CHANGE, $105,285 ,
56.9%TOTAL
GENERAL RETAIL,
2.4% CHANGE, $72,674 ,
39.3%TOTAL
ALL OTHER, -5.5% CHANGE, $7,110 , 3.8%TOTAL
Town And Country Shopping Center 2022Q4 SALES TAX AMOUNTS
FOOD PRODUCTS,
$93,523 ,
54.4%TOTAL
GENERAL RETAIL, $70,974 ,
41.3%TOTAL
ALL OTHER, $7,524 , 4.4%TOTAL
Town And Country Shopping Center 2021Q4 SALES TAX AMOUNTS
BUSINESS TO BUSINESS,
25.6%CHANGE,
$2,539,070 ,
39.0%TOTAL
GENERAL RETAIL,
-9.8% CHANGE, $1,730,113,
26.5% TOTAL
TRANSPORTATION,
-6.2% CHANGE,
$1,129,540,
17.3% TOTAL
FOOD PRODUCTS,
15.7% CHANGE, $1,039,984 ,
16.0%TOTAL
MISCELLANEOUS, -24.4% CHANGE,
$47,882 , 0.7%TOTAL CONSTRUCTION,
-15.2% CHANGE, $30,176 ,
0.5%TOTAL
All Other Geos combined with Balance of Jurisdiction 2022Q4
SALES TAX AMOUNTS
BUSINESS TO BUSINESS,
$2,022,323 ,
32.9%TOTAL
GENERAL RETAIL, $1,917,420,
31.2% TOTAL
TRANSPORTATION,
$1,204,573,
19.6% TOTAL
FOOD PRODUCTS,
$898,543 , 14.6%TOTAL
MISCELLANEOUS,
$63,370 , 1.0%TOTAL
CONSTRUCTION,
$35,605 , 0.6%TOTAL
All Other Geos combined with Balance of Jurisdiction 2021Q4
SALES TAX AMOUNTS
City of Palo Alto Geo Area Pie Charts
City of Palo Alto
www.avenuinsights.com (800) 800-8181 Page 13
Balance of Jurisdiction,
21.9%CHANGE,
$3,388,529 ,
52.0%TOTAL
Stanford Shopping Center,
-18.3% CHANGE, $1,546,539 ,
23.7%TOTAL
Greater Downtown,
10.0% CHANGE, $922,907 ,
14.2%TOTAL
El Camino Real and Midtown,
1.1% CHANGE, $350,450 ,
5.4%TOTAL
Town And Country Shopping Center,
7.6% CHANGE, $185,069 , 2.8%TOTAL California Avenue, 10.3% CHANGE,
$123,269 , 1.9%TOTAL
All Geo Area Totals 2022Q4 SALES TAX AMOUNTS
Balance of Jurisdiction,
$2,779,078 , 45.2%TOTAL
Stanford Shopping Center,
$1,893,040 , 30.8%TOTAL
Greater Downtown,
$839,292 ,
13.7%TOTAL
El Camino Real and Midtown,
$346,627 , 5.6%TOTAL
Town And Country Shopping Center,
$172,021 , 2.8%TOTAL
California Avenue,
$111,776 , 1.8%TOTAL
All Geo Area Totals 2021Q4 SALES TAX AMOUNTS
BUSINESS TO BUSINESS,
24.2%CHANGE, $2,756,562 ,
35.1%TOTAL
GENERAL RETAIL,
0.9% CHANGE, $2,305,038 ,
29.4%TOTAL
TRANSPORTATION,
-8.9% CHANGE,
$1,307,454 ,
16.7%TOTAL
FOOD PRODUCTS,
16.1% CHANGE, $1,260,287 ,
16.1%TOTAL
MISCELLANEOUS, -29.2% CHANGE,
$183,393 , 2.3%TOTAL
CONSTRUCTION,
-11.0% CHANGE,
$35,791 , 0.5%TOTAL
Palo Alto citywide 2022Q4 SALES TAX AMOUNTS
BUSINESS TO BUSINESS,
$2,219,376 , 30.3%TOTAL
GENERAL RETAIL,
$2,283,693 ,
31.2%TOTAL
TRANSPORTATION,
$1,435,594 ,
19.6%TOTAL
FOOD PRODUCTS, $1,085,805 ,
14.8%TOTAL
MISCELLANEOUS,
$259,116 , 3.5%TOTAL
CONSTRUCTION, $40,215 ,
0.5%TOTAL
Palo Alto citywide 2021Q4 SALES TAX AMOUNTS
City of Palo Alto Geo Area & Citywide Pie Charts
California Legislative
Update March 1, 2023
This edition of our policy update provides information on
legislation introduced for 2023 primarily related to local
taxes. We hope that this update is helpful, and we will
provide additional updates in the future regarding other
legislation of interest. Please reach out to us with any
questions.
Government Relations Contact
Fran.Mancia@avenuinsights.com / 559.288.7296
2023 Legislation
Friday, February 17 marked the deadline for bill
introductions in 2023. Legislators, in particular new
legislators, introduced a windfall of bills, surpassing
introduction numbers for the last ten years. In total, 2,632
bills were introduced – 1,751 in the Assembly, 881 in the
Senate, and six special session bills. About 40% of the
legislation introduced are spot bills – placeholders that will
be amended with substantive language prior to being
referred to policy committees.
In the Senate, amendments are must be drafted by
legislative counsel and submitted to the Senate Rules
Committee on or by March 22 at 3:00 p.m. In the
Assembly, amendments must be provided to legislative
counsel on or by February 27 at 5:00 p.m. This is to say
that a flood of substantive amendments is anticipated the
third week in March, which will further define policy
discussions this year.
Sales and Use Taxes
AB 52 (Grayson) Sales and Use Tax Law:
manufacturing equipment: research and
development. Would express the intent of the legislature
to expand the sales and use tax exemption for
manufacturing and research and development equipment
to preserve California’s status as a hub of innovation and
technology and to encourage greater investment in
California. Avenu is watching this measure closely, as it is a
version of AB 1930 vetoed by the governor last year and
could be detrimental to municipal finances.
Status: Not yet referred to policy committee
Cal Cities Position: Watch
AB 314 (Patterson, Jim) Sales and Use Tax:
exemptions: trucks for use in interstate or out-of-state
commerce. Extends the sales and use tax exemption from
2024 to 2029 for a truck, trailer, or semitrailer over 6000
pounds that is purchased to use in a different state. It also
requires the buyer to give an affidavit stating that the
vehicle will only be used outside of the state and that it will
leave the state within a certain time period. States that local
government agency revenue losses resulting from the bill
will not be reimbursed.
Status: Referred to the Assembly Committee on Revenue
and Taxation
Cal Cities Position: Watch
AB 543 (Gipson) Sales and Use Tax Law: exemptions:
petroleum products: water common carriers. Removes
the January 1, 2024 sunset date for the sales and use tax
exemption on the sale of fuel and petroleum products sold
to a water common carrier for immediate shipment outside
California for consumption in the conduct of its business
as a common carrier after the first out-of-state destination.
States that local government agency revenue losses
resulting from the bill will not be reimbursed.
Status: Referred to the Assembly Committee on Revenue &
Taxation
Cal Cities Position: Watch
AB 1203 (Bains) Sales and use taxes: exemptions:
breast pumps and related supplies. Would, on or after
January 1, 2024, and before January 1, 2029, exempt the
gross receipts from the sale in this state of, and the storage,
use, or other consumption in this state of, breast pumps,
breast pump collection and storage supplies, breast pump
kits, and breast pads. States that local government agency
revenue losses resulting from the bill will not be
reimbursed.
Status: Not yet referred to policy committee
Cal Cities Position: Watch
AB 1249 (Ta) Sales and use taxes: exemption: tax
holiday: school supplies. Would, on and after January 1,
2024, and before January 1, 2029, exempt from sales and
use taxes the gross receipts from the sale of, and the
storage, use, or other consumption of, qualified school
supplies, for the two-day period beginning at 12:01 a.m. on
the third Saturday of July of each year and ending at 11:59
p.m. on the following day. States that local government
agency revenue losses resulting from the bill will not be
reimbursed.
Status: Not yet referred to policy committee
Cal Cities Position: Watch
SB 96 (Portantino) Sales and Use Tax Law: live
events: historic event venues. Would state the intent of
the legislature to enact legislation expanding the state sales
and use tax exemption to transactions during live events at
California historic event venues for reinvestment in
historic preservation activities.
Status: Not yet referred to policy committee
Cal Cities Position: Watch
Motor Vehicle Taxes
AB 16 (Dixon) Motor Vehicle Fuel Tax Law:
adjustment suspension. Would authorize the
governor to suspend an adjustment to the motor
vehicle fuel tax scheduled on or after July 1, 2024,
upon determining that increasing the rate would
impose an undue burden on low-income and middle-
class families. The California Department of Tax and
Fee Administration adjusts the tax annually based on
a percentage amount equal to the increase in the
California Consumer Price Index.
Status: Not yet referred to policy committee
Cal Cities Position: Watch
AB 53 (Fong, Vince) Motor Vehicle Fuel Tax
Law: suspension of tax. Would suspend the tax on
motor vehicle fuels for one year, would require that
all savings realized by a person other than an end
consumer be passed on to the end consumer, and
would make the violation of this requirement an
unfair business practice in violation of unfair
competition laws.
Status: Not yet referred to policy committee
Cal Cities Position: Watch
SB 5 (Nguyen) Motor Vehicle Fuel Tax Law:
limitation on adjustment. Would limit the annual
adjustment to motor vehicle fuel taxes to a maximum
of 2% for rate adjustments made on or after July 1,
2023.
Status: Referred to the Senate Committee on
Governance & Finance
Cal Cities Position: Watch
Property Taxes
AB 84 (Ward) Property tax: welfare exemption:
affordable housing. Pursuant to the state constitution,
affordable rental housing owned by a nonprofit entity is
considered a “charitable” use and exempt from basic
property taxes. AB 84 allows nonprofit affordable rental
housing to access the existing welfare property tax
exemption from the date the property is restricted for
affordable housing.
Status: Referred to the Assembly Committees on Housing
& Community Development and Revenue & Taxation
Cal Cities Position: Watch
SB 726 (Archuleta) Property taxation: exemption:
disabled veteran homeowners. Would allow veterans
who are 100% disabled, their spouses, and unmarried
surviving spouses an exemption from taxation on their
property that does not exceed $863,790, provided certain
conditions are met between January 1, 2024 and January 1,
2034.
Status: Not yet referred to policy committee
Cal Cities Position: Watch
Miscellaneous
AB 41 (Holden) Telecommunications: The Digital
Equity in Video Franchising Act of 2023. Revises
existing law pertaining to cable operators and state video
franchising including:
• Expanding the definition of video service to include
video programming provided as part of, and via, a
service that enables users to access content,
information, email, or other services offered over the
public internet;
• Providing that the act does not authorize the
California Public Utilities Commission to regulate the
rates of video services;
• Revising the revenues excluded from the definition of
“gross revenue” for purposes of calculating the
franchise fee for a local jurisdiction; and
• Expanding the prohibition on certain cable operators
or video service providers from discriminating against,
or denying access to service to, any group of potential
residential subscribers.
Status: Referred to the Assembly Committee on
Communications & Conveyance
Cal Cities Position: Support
AB 534 (McCarty) Local agencies: airports: customer
facility charges. Existing law authorizes airports to
require rental companies to collect a customer facility
charge or an alternative customer facility charge under
specified circumstances for purposes that include
financing, designing, and constructing or operating airport
vehicle rental facilities and common-use transportation
systems. Current law, beginning January 1, 2024, provides
that the authorization for an airport to impose a customer
facility charge becomes inoperative when the bonds used
for financing are paid, except as specified. This bill would
delete the provision ending the authorization described
above.
Status: Referred to the Assembly Committee on Privacy &
Consumer Protection
Cal Cities Position: Watch
AB 537 (Berman) Short-term lodging: advertising:
rates. Would prohibit a place of short-term lodging, from
advertising or offering a room rate that does not include all
taxes and fees required to book or reserve the short-term
lodging. The bill would make a knowing violation of those
provisions subject to a specified civil penalty not to exceed
$10,000 and would authorize an action to enforce those
provisions to be brought by a city attorney, district
attorney, or the Attorney General.
Status: Referred to the Assembly Committees on Business
& Professions and Judiciary
Cal Cities Position: Watch
SB 532 (Wiener) Ballot measures: local taxes. Current
law requires that the ballots used when voting upon a
measure proposed by a local governing body or submitted
to the voters as an initiative or referendum measure, have
printed on them a true and impartial statement describing
the purpose of the measure. If the proposed measure
imposes a tax or raises the rate of a tax, current law
requires the ballot to include in the statement of the
measure the amount of money to be raised annually and
the rate and duration of the tax to be levied. This bill
would exempt from this requirement a measure that
imposes or increases a tax with more than one rate or
authorizes the issuance of bonds.
Status: Referred to the Senate Committees on Governance
& Finance and Elections & Constitutional Amendments
Cal Cities Position: Watch
SB 676 (Allen) Responsible Pool Disinfection and
Water Conservation Act: local tax authorization.
Would authorize a county to levy a tax by ordinance,
approved by a 50% vote of the electors, at a rate of no
more than $0.30 per tablet, on the sale within its
jurisdiction of trichlor tablets.
Status: Not yet referred to policy committee
Cal Cities Position: Watch
SB 721 (Becker) Special taxes: vacant land.
May be acted upon on or after March 19.
The California Constitution generally conditions the
imposition of a special tax by a city, county, or special
district upon the approval of 2/3 of the voters of the city,
county, or special district voting on that tax. Under current
law, a charter city, pursuant to its constitutional authority
over municipal affairs, may levy local taxes to raise
revenues for local purposes, subject to restrictions
imposed by that city’s charter or preemption in matters of
statewide concern. Current law also authorizes the
legislative body of any city to levy any tax which may be
levied by any charter city, subject to the voters’ approval
pursuant to the California Constitution. Current law
specifies procedural requirements for the legislative body
of a city, county, or district to propose to the voters an
ordinance or resolution to adopt a special tax. This bill
would specify that, as used in those procedural
requirements, a special tax includes a tax, levied by any
city, including a charter city, county, or district on vacant
sites included in the inventory on land suitable and
available for residential development pursuant to the
housing element of a county’s or a city’s long-term general
plan, that meets the constitutional requirements.
Status: Not yet referred to policy committee
Cal Cities Position: Watch
SB 798 (Glazer) Elections: local bond measures: tax
rate statement. Current law requires local governments,
when submitting a measure for voter approval for the
issuance of bonds that will be secured by an ad valorem
tax, to provide voters a statement that includes estimates
of the tax rates required to fund the bonds. Under current
law, the estimated tax rate is expressed as the rate per $100
of assessed valuation on all property to be taxed to fund
the bonds. This bill would instead require that the
estimated tax rate in the statement be expressed as the rate
per $100,000 of assessed valuation on all property to be
taxed to fund the bonds.
Status: Not yet referred to policy committee
Cal Cities Position: Watch