Thread: 11% increase in sales tax revenue projected in Solana Beach

11 percent increase in sales tax projected in Solana Beach

Jun 24, 2010
By Jonathan Horn

Largely attributed to one unnamed business

City officials remain mum on the name of a Solana Beach business that is largely responsible for an increase in sales-tax revenue for this year and even more next year.

The business has already made an impact this fiscal year, helping to increase sales-tax revenue by roughly $124,000 above what staff projected in January. The forecast for 2009-2010 is now $2.493 million.

Next year, according to the budget being considered Wednesday night (after press time for this newspaper), sales-tax revenue will increase to $2.626 million, an 11 percent increase from January's estimates.

That amounts to $257,400 more.

A memo from City Manager David Ott to the staff explained, "A new business in town contributed the majority of this gain."

The new business was largely responsible for a boost in gross sales receipts from October 2009 to December 2009. Taxable sales were up 10.4 percent, or an adjusted 9.3 percent, from that same time period a year ago, according to Ott's memo.

However, when asked to name the business, Ott, Deputy Mayor Lesa Heebner and councilmen Joe Kellejian and Dave Roberts all declined to answer. Mayor Tom Campbell and Councilman Mike Nichols had not returned calls by press time.

City officials cited a state law protecting taxation information as the reason for not naming the business.

The Solana Beach Sun made two California Public Records Act requests in an effort to get the information released. The city denied both, citing similar confidentiality laws stating that "information required from any taxpayer in connection with the collection of local taxes that is received in confidence and the disclosure of the information to other persons would result in unfair competitive disadvantage to the person supplying the information."

The Sun, advised by California Newspaper Publishers Association attorneys, argued that the name of such a business could not have been given to the city confidentially.

CNPA attorney Tom Newton said that if the city has confidence in a significant sales tax increase attributed to one business, and that increase is reflected in the city budget, then the public has an "overriding" right to know where the money is coming from.

Newton agreed that while specific financial details are confidential, the business's name is public record.

However, City Attorney Johanna Canlas said Solana Beach did in fact learn the name of this business through confidential means.

"The city obtained the name in the process of administering taxes and under the specific sections of the Government Code section 6254(i), and Revenue and Taxation Code 7056 and 7056.5, that information is confidential," she said. "We both play different sides on this and I think those sections are pretty clear on how the city should be dealing with this kind of information."

The city's sales-tax revenue increase somewhat reverses a downward trend. City staff said sales-tax revenue in mid-year estimates, which represents 20 percent of Solana Beach's income, has "plummeted" since fiscal year 2007-2008, down more than $600,000 at times since.

Proposition L, which would have levied a tax on all city businesses, was rejected earlier this month. The City Council justified that tax by saying it would get businesses to pay their "fair share," since sales-tax revenue was no longer as strong. If passed, the tax was projected to ultimately generate $500,000 annually for Solana Beach, however in the first year the plan was to only enforce it at half price.

When asked about its failure, Heebner noted the city's success at spending within its means.

"We're well run, we're efficient, we have healthy reserves and we will move forward," she said.

Ott said in a voicemail that the city is still ending the fiscal year with a roughly $500,000 deficit, despite "a couple" of quarters with the sales tax "uptick." He said any increased revenue would go to closing that funding gap.

Along those lines, also earlier this month, the city reached an agreement with 65 percent of its employees reducing pension contributions. It is projected to save Solana Beach roughly $85,000 this year, and starting two fiscal years from now, $240,000 annually.

According to the budget considered Wednesday, Solana Beach sales-tax revenue was $3.04 million in fiscal year 2007-2008. It dropped to $2.6 million in fiscal year 2008-2009 during the recession. The 2009-2010 fiscal year projection has it falling again to $2.493 million.

The proposed 2010-2011 budget, reflecting the 11 percent increase, has sales-tax revenue back up to $2.626 million from the mid-year estimate, which was $2.369 million.

A recent report from the State Board of Equalization says taxable sales decreased statewide 19 percent in the second quarter of 2009, calling it an "unprecedented decline." The report says there were "only" $113.4 billion of taxable sales during this time period, which is a drop of roughly $26 billion from the same time the previous year. According to that same report, Solana Beach had $52.6 million of taxable sales during that time, about $42.1 million of which were retail and food.

http://www.solanabeachsun.com/news/2712 ... lana-beach

A new business in town contributed the majority of this gain."

What the big secret? Why not tell what business?

Originally Posted by SicNTiredInSoCal

A new business in town contributed the majority of this gain."

What the big secret? Why not tell what business? :?

"City officials cited a state law protecting taxation information as the reason for not naming the business."

ANOTHER FRIGGIN CA Stupid law! OMG...

Texas Here we come

Originally Posted by dregerk

ANOTHER FRIGGIN CA Stupid law! OMG...

Texas Here we come

This keeps them from releasing YOUR tax records too.

Originally Posted by JohnDoe2

Originally Posted by SicNTiredInSoCal

A new business in town contributed the majority of this gain."

What the big secret? Why not tell what business?

"City officials cited a state law protecting taxation information as the reason for not naming the business."

Thanks - thats what I get for skimming!