California saw a 1.6% decrease in sales tax receipts in the third quarter of 2023 compared to the same period in 2022.
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BREA, Calif. (January 22, 2024) — The Golden State reported a slight decrease in sales tax receipts in the third quarter of 2023, showing an overall decline of 1.6% compared to the same period in 2022.
“An 8% decline in receipts from service stations and petroleum providers contributed the most to the drop as consumers benefitted from lower prices at the pump. This also dampened receipts from sellers of general consumer goods as those retailers selling fuel experienced a similar drop. We also saw consumers pull back on large purchases,” stated Andy Nickerson, President/CEO of HdL Companies, the leading provider of revenue enhancement, technology and consulting services for local governments.
Building and construction projects continued slowing as higher interest rates constrained commercial development, public infrastructure projects and new housing starts. Meanwhile, despite an increase in new car registrations and the effect of rental car agencies restocking their fleets, the automobile and transportation sector declined 2.6%. Like other industry groups, elevated financing costs are expected to create headwinds for auto sales.
“Spending at local restaurants was a bright spot in the data showing an increase of 2.6%,” noted Nickerson. “As tourism, holiday and business travel are all expected to recover in 2024, the industry is bracing for implementation of AB 1228, a new California law setting minimum wages for fast food restaurants.”
HdL Companies expect sales tax receipts to decrease modestly in the final quarter of 2023 before making a recovery in 2024. “Lingering consumer confidence may have also received welcome news as the Federal Reserve considers softening rates by mid-2024,” Nickerson concluded.
Each quarter, HdL Companies reports on California’s sales tax receipts and impacts on local jurisdictions.
| Statewide - All Data | 3Q 2023 | 3Q 2022 | % Change |
| Autos & Transportation | 359,258,944 | 369,112,524 | -2.7% |
| Building & Construction | 199,505,090 | 204,891,856 | -2.6% |
| Business & Industry | 385,943,837 | 373,373,212 | 3.4% |
| Food & Drugs | 102,280,233 | 105,087,995 | -2.7% |
| Fuel & Service Stations | 212,123,789 | 230,847,386 | -8.1% |
| General Consumer Goods | 360,538,465 | 371,482,605 | -2.9% |
| Restaurants & Hotels | 294,974,767 | 287,468,658 | 2.6% |
| County & State Pools | 397,765,750 | 410,262,951 | -1.7% |
| Transfers & Unidentified | 4,136,698 | 3,167,583 | -3.0% |
| TOTAL | 2,316,527,573 | 2,355,694,770 | -1.7% |
View a complete table of sector and regional data.
Additional Resources
- California Sales Tax Trends and Economic Drivers Report Q323 Data
- California Consenus Forecast Q323 Data Webinar Recording
- California Proposition 13 Inflation Factor for 2024/25
