HomeMy WebLinkAboutStaff Report 2502-4116CITY OF PALO ALTO
CITY COUNCIL
Special Meeting
Monday, March 03, 2025
Council Chambers & Hybrid
5:30 PM
Agenda Item
10.Sales Tax Digest Q3 (Jul-Sept) 2024
City Council
Staff Report
Report Type: INFORMATION REPORTS
Lead Department: Administrative Services
Meeting Date: March 3, 2025
Report #:2502-4116
TITLE
Sales Tax Digest Q3 (Jul-Sept) 2024
ANALYSIS
This report transmits information regarding the City of Palo Alto’s sales tax receipts for the second
quarter (April-June) of 2024. Listed below are highlights from the report; detailed discussion and data
can be found in the attached City of Palo Alto Sales Tax Digest and Legislative Update 2024 Q2
(Attachment A).
Regional and statewide sales tax based upon adjusted economic benchmark year (Attachment A, p. 2)
•Palo Alto: increased 0.3%
•San Francisco Bay Area: decreased 2.9%
•California statewide: decreased 2.5%
City’s Most Significant Reasons for increases during this period (Attachment A, p. 1)
•New Auto Sales segment increased 9.4%, comprises 15.4% of total sales tax
•Restaurant segment increased by 6.1%, comprises 16.4% of total sales tax
County Pool (Attachment A, p. 4)
•The City’s share of the county pool for this quarter is 5.9%, lower from Q3 2023
•Sales tax receipts from the County pool totaled $1.4 million
ATTACHMENTS
Attachment A - 2024 Q3 Sales Tax Digest Summary
APPROVED BY:
Lauren Lai
City of Palo Alto
Collections through December 2024
Sales July through September 2024 (2024Q3)
www.avenuinsights.com (800) 800-8181 Page 1
California Overview
For the year ending in the third quarter of 2024, cash receipts decreased by 2.0% statewide and
decreased by 5.5% in S.F. Bay Area. However, when adjusted for non-period-related payments, the
overall economic sales tax activity for the year ending in the third quarter of 2024 decreased by 2.5%
statewide and decreased by 2.9% in S.F. Bay Area.
For the year ending in the third quarter of 2024, sales tax cash receipts for the city decreased by 4.9%
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 the third quarter of 2024 increased by 0.3%. The primary
drivers of Palo Alto's sales tax increase were the restaurants and new auto sales sectors. Restaurant sales
tax revenue rose by 6.1%, representing 16.4% of the city's total sales tax. Year-over-year, new auto sales
grew by 9.4%, contributing 15.4% to the total sales tax revenue.
Same quarter sales tax cash receipts decreased by 4.2% in California from Q3 2023 to Q2 2024. The Palo
Alto citywide sales tax cash receipts decreased by 15.3% over the Q3 2023 to Q2 2024 period. Key reasons
for the Palo Alto decrease during this period were: 1) Decrease in the business services segment, 2)
Decrease in furniture & appliance stores (mainly electronics stores) from Q3 2023 to Q3 2024 by 19.4%,
3) Decrease in the leasing segment of 11.5% which comprises 19.4% of the total sales tax for the city.
According to the California New Car Dealers Association (CNCDA), California’s new light vehicle
registrations fell by 1.7% in 2024Q3.
City of Palo Alto
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Regional Overview
The first chart on page two shows adjusted economic benchmark year amounts, which shows the year
ended third quarter of 2024 compared to the year ended third quarter of 2023 (benchmark years are
rolling annual comparisons through the current quarter). The growth rates are different between the
state and Palo Alto because the sales tax from businesses in Palo Alto performed better overall than the
statewide average.
BENCHMARK YEAR 2024Q3 COMPARED TO BENCHMARK YEAR 2023Q3
City of Palo Alto
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Gross Historical Sales Tax Cash Receipts by Benchmark Year and Quarter (Before Adjustments)
*Benchmark year (BMY) is the sum of the current and 3 previous quarters (2024Q3 BMY is sum of 2024 Q3, 2024 Q2, 2024 Q1, 2023 Q4)
City of Palo Alto
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County Pool Results
The California sales tax system is referred to as a ‘sales and use tax’ system which covers both sales tax
and ‘use tax’. The County Pool revenues largely reflect use tax from qualifying transactions that do not
involve a California based point of sale. Businesses report their use tax quarterly based on business activity
conducted throughout the county. The County Pool is distributed each quarter based upon a formula
where the jurisdiction’s quarterly percentage is based upon its total sales tax receipts for the quarter as a
percentage of all sales tax receipts for all jurisdictions within the county. Thus, if local business activity
(sales tax receipts) within Palo Alto increases in the quarter relative to the rest of the county, then the
Palo Alto County pool percentage also will increase for the quarter compared to the rest of the county.
The total county pool is multiplied by the city’s quarterly percentage to determine the jurisdiction share
each quarter.
In the third quarter of 2024, cash receipts for the overall County Pool increased by 4.1% from the same
quarter in the prior year. The City’s share of the County Pool decreased to 5.9%. The City’s revenues from
the County Pool decreased from $1,489,193 in 2023Q3 to $1,377,891 in 2024Q3.
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 third quarter of 2024. The Top 25 Sales/Use Tax contributors generate
60.1% of Palo Alto’s total sales and use tax revenue.
City of Palo Alto
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Sales Tax from Largest Non-Confidential Sales Tax Segments (Economic)
City of Palo Alto
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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.
City of Palo Alto
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Historical Analysis by Calendar BMY from 2015Q3 to 2024Q3
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
(2024Q3 BMY is sum of 2024 Q3, 2024 Q2, 2024 Q1, 2023 Q4).
City of Palo Alto
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Quarterly Analysis by Sales Tax Category: Change from 2023Q3 to 2024Q3 (Economic)
Unlike the chart on page one which showed a ‘benchmark year’ through the third quarter of 2024, the chart above shows a comparison of one quarter only –
third quarter of 2024 to third quarter of 2023. This chart is for local ‘brick and mortar’ businesses, and it excludes county pools and adjustments.
City of Palo Alto
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City of Palo Alto Geo Areas & Citywide Chart Data: Change from 2023Q3 to 2024Q3 (Economic)
City of Palo Alto
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City of Palo Alto Geo Areas & Citywide Chart Data: Change from 2023Q3 to 2024Q3 (Economic) Cont.
City of Palo Alto
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City of Palo Alto Geo Area Pie Charts
City of Palo Alto
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City of Palo Alto Geo Areas Pie Charts
City of Palo Alto
www.avenuinsights.com (800) 800-8181 Page 13
FOOD PRODUCTS,
1.4%CHANGE, $114,338 ,
62.7%TOTAL
GENERAL RETAIL,
-2.6% CHANGE, $67,994 ,
37.3%TOTAL
ALL OTHER, -97.8% CHANGE, $64 , 0.0%TOTAL
Town And Country Shopping Center 2024Q3 SALES TAX AMOUNTS
FOOD PRODUCTS,
$112,781 ,
60.8%TOTAL
GENERAL RETAIL,
$69,832 ,
37.6%TOTAL
ALL OTHER, $2,892 , 1.6%TOTAL
Town And Country Shopping Center 2023Q3 SALES TAX AMOUNTS
BUSINESS TO BUSINESS,
-23.3%CHANGE,
$2,041,438 ,
32.7%TOTAL
GENERAL RETAIL,
-6.7% CHANGE, $1,653,138,
26.5% TOTAL
TRANSPORTATION,
-19.4% CHANGE,
$1,312,722,
21.0% TOTAL
FOOD PRODUCTS,
0.5% CHANGE, $1,142,365 ,
18.3%TOTAL
MISCELLANEOUS, 30.9% CHANGE,
$65,461 , 1.0%TOTAL
CONSTRUCTION,
23.5% CHANGE, $31,641 ,
0.5%TOTAL
All Other Geos combined with Balance of Jurisdiction 2024Q3
SALES TAX AMOUNTS
BUSINESS TO BUSINESS,
$2,661,080 ,
36.6%TOTAL
GENERAL RETAIL, $1,771,654,
24.4% TOTAL
TRANSPORTATION,
$1,628,437 ,
FOOD PRODUCTS,
$1,136,411 ,
MISCELLANEOUS,
$49,999 , 0.7%TOTAL
CONSTRUCTION, $25,618
, 0.4%TOTAL
All Other Geos combined with Balance of Jurisdiction 2023Q3
SALES TAX AMOUNTS
City of Palo Alto Geo Area Pie Charts
City of Palo Alto
www.avenuinsights.com (800) 800-8181 Page 14
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City of Palo Alto Geo Area & Citywide Pie Charts