California continued to show vast improvement in sales tax receipts in the fourth quarter of 2021 with a 15% spike in local one-cent sales and use tax compared to the same quarter last year.

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BREA, Calif. (April 13, 2022) — The Golden State continued to show vast improvement in sales tax receipts in the fourth quarter of 2021– reporting an overall 15% spike in local one-cent sales and use tax from October through December 2021 when compared to the same quarter last year. Significant growth in general consumer goods, restaurants, fuel and auto/transportation industries helped drive the results and finish the calendar year with strong gains to local agencies across the state.  

“Brick and mortar retailers did exceptionally well as many shoppers returned to physical stores for holiday shopping rather than shopping online as the COVID crisis waned,” noted HdL President/CEO Andy Nickerson. Many retailers are now generating revenue that is nearly as much, or even higher, than pre-pandemic levels. Gains from the countywide use tax pools, however, slowed to 2%. 

Fuel prices began ticking upward and more travelers took to the road during this quarter which caused a 55% spike in receipts for fuel and services stations when compared with the same quarter in 2020.  Sales by new and used car dealers were also much higher than a year ago, reporting solid growth of 15% while being continually challenged with inventory shortages. “Higher prices have more than offset the decline in unit volume in terms of revenue generation for most car dealerships,” stated Nickerson.  

Restaurant and hotel receipts surged 47% during the quarter, proving to be one of the highest in the State’s history. Increased menu prices coupled with robust demand for dining out are largely responsible for the gains. These impressive results do not yet include the positive impact that will occur later this year as international travel steadily increases at major airports, and conference and business travel continue their return to pre-pandemic levels.

These solid fourth quarter results fueled a strong finish for calendar year 2021, exhibiting a 20% increase in receipts compared to calendar year 2020.  “The future growth rate for statewide sales tax revenue is expected to continue but decelerate into 2023,” said Nickerson. “Headwinds in 2022, including surging inflation, a dramatic jump in the global price of crude oil due to Russia’s war in Ukraine, and corresponding monetary tightening by the Federal Reserve, are expected to result in weakening consumer sentiment.”

A complete table of sector and regional data is available HERE.

 

About HdL Companies 

HdL Companies is dedicated to supporting local governments across the U.S. with revenue enhancement, technology and consulting services that enable cities, counties and special districts to better serve their constituents. Founded in 1983, HdL Companies’ comprehensive approach to revenue management is trusted by over 500 local governments. The company has successfully recovered over $3 billion in revenue for client agencies. For more information, visit hdlcompanies.com.

Contact: Jennifer Pierce, HdL Companies, 714.879.5000

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