Sales Tax Update
City of Oakland
Finance and Management Committee
May 28, 2024
About HdL
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Increased revenue
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by keeping current with
ever-changing legislation
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Average city growth
rates are ~3%,
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EMPLOYEE
OWNED
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Municipal
Clients
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Recovered
revenue
99.6%
Avg. Client
Retention
CITY OF OAKLAND 2May 2024
Sales and Use Tax
3 * Rate above 9.25% cap: AB 1613 Transportation Tax Measure W and SB 797 PCJPB (Caltrain) Measure RR – rates are recipients of special legislation that EXEMPTED these countywide tax rates to not count against statewide TUT cap. 100% to City, Unrestricted
Shared, Restricted Use
CITY OF OAKLAND
0.50% District Tax Cap Space
left for City of Oakland
May 2024
Additional
Voter-
Approved
Transaction
Taxes
Alameda Agencies –Sales Tax Rates
4 Oakland Sales Tax Rate = 10.25%
CITY OF OAKLAND
Cities listed approved local TUTs
• Six at 10.75% rates have no cap room
• Emeryville 0.25% left in cap
• Cities not listed have
0.50% cap space
May 2024
What is Sales Tax…
5 • Tax only levied once: when purchased or used
by the ultimate consumer
• The 1% city portion is distributed to the Agency
of the location of the transaction.
• Retailer buys at wholesale and pays no tax
Sales tax is imposed on ALL sales of
tangible personal property in California
CITY OF OAKLANDMay 2024
‘Use Tax’ and the Pool Distribution
6 o Charged on goods sold to California customers from out-of-state retailers o Collected but a local place of sale limited to each county HOW IS USE TAX DISTRIBUTED?
First – allocated into the county pool
where the goods were delivered
Second – distributed from the pool to all
county agencies, based on their pro-rata
share of sales tax for that quarter.
CITY OF OAKLANDMay 2024
What is ‘Use Tax’…
7 HOW IS USE TAX DISTRIBUTED? Countywide Pool Pro-rata share… CITY OF OAKLANDMay 2024
Alameda,3% Alameda Co. Uninc, 3%
Albany
1%Berkeley
5%
Dublin
8%
Emeryville
2%
Fremont
18%
Hayward
12%
Livermore
10%
Newark
4%
Oakland
15%
Pleasanton
6%
San Leandro
10%
Union City
3%
Cash Flow Timing
8 Sales In Revenue In
January –
February –
March March – 27% Adv
April – 27% Adv
May – Clean Up Then Data released June 1.
Sales Tax Influences
9CITY OF OAKLANDMay 2024
Tourism &
Business
Travel
Interest Rates
Savings Trends
AB 1228
Fast Food
Minimum Wage
Consumer
Spending
Gas Prices
City of Oakland
Sales Tax
Industry Groups
May 2024 CITY OF OAKLAND 10
Autos And
Transportation
14%
Building And
Construction
9%
Business And
Industry
11%
Food And Drugs
9%Fuel And Service Stations
13%
General
Consumer
Goods
9%
Restaurants
And Hotels
17%
ALLOCATIONS FROM
COUNTY POOL
18%
Oakland Sales Tax Results (Oct, Nov, Dec Sales)
CITY OF OAKLAND 11May 2024
4th Quarter 2023 Statewide Sales Tax Results
CITY OF OAKLAND 12May 2024
Oakland Sales Tax - Larger Sectors
What contributed to (-7.1%)
decline?
Inflation: baked into cost of many
taxable goods, increases revenues
◦ Petroleum segment is jet fuel; price
drops, lower volume tied to out of
area filing, fewer planes available
◦ Service Stations: Gasoline prices
soared in 2022
◦ Demand for new vehicles held up,
more brands (Chevrolet, Ford) added
past year
CITY OF OAKLAND 13
Top Performing Sectors:
May 2024
Not in chart above – cannabis sales plunged (-26.5%);
market saturation, illegal competitors
Oakland Sales Tax –Number of Seller Permits
May 2024 CITY OF OAKLAND 14
724
304
3,651
818
141
4,857
2,041
13,422
800
347
3,923
882
145
6,375
1,958
14,791
- 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 Autos And Transportation
Building And Construction
Business And Industry
Food And Drugs
Fuel And Service Stations
General Consumer Goods
Restaurants And Hotels
TOTAL
4Q19 4Q23
Per Capita
Sales Tax
Trends
CITY OF OAKLAND 15May 2024
Prop 172 Tax History
16 • 1978 – Voter pass Prop 13 limiting the amount of property tax revenue to schools and local government
• 1992 – State Legislature and Governor Wilson, facing budget deficits, instructed County Auditors to shift the allocation of local property tax revenues from local government to ‘educational revenue augmentation funds (ERAFs) – allowing the State’s General Fund to reduce support of schools
• 1993 - Proposition 172 Imposed 0.50% for public safety (Police, Fire, Sheriff, DA) to replace confiscation of ERAF property tax revenues. Codified a prior sales tax increase for public safety, so from the State’s portion and effectively no change to statewide rate.
Credit: www.CaliforniaCityFinance.com/Prop172Facts.pdf
May2024 CITY OF OAKLAND 16
Prop 172 - Allocation
May 2024 CITY OF OAKLAND 17
Oakland 2.1% 4,340,526 4,425,917
Thank you!
Susie Woodstock, Principal
[email protected]
888.861.0220
www.hdlcompanies.com
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