Artesia News

Artesia shows signs of economic upturn

Fourth Quarter Receipts for Third Quarter Sales (July to September 2010)

Receipts for Artesia’s third quarter sales were 4.7 percent higher than the same quarter one year ago. Actual sales were up to 5.8 percent when reporting aberrations were factored out.

The City experienced a stronger sales quarter for building & construction, and restaurants & hotels. Recent additions helped boost revenues from general consumer goods.

The gains were partially offset by a decline in sales from business & industry. A business closeout and reporting problems reduced revenues from the autos & transportation group.

Adjusted for reporting aberrations, taxable sales for all of Los Angeles County increased 3.7 percent over the comparable time period while the Southern California region, as a whole, was up 4 percent.

Statewide Overview

Statewide, California’s allocation of local Bradley-Burns revenue for sales occurring July through September were 4.7 percent higher than the third quarter of 2009 after accounting anomalies were factored out.

Higher fuel prices and usage, business investment in new equipment and technology, and solid gains in some categories of consumer goods and restaurants all contributed to the increase. Receipts from food, drugs, and construction materials were slightly lower than last year’s comparison quarter as was the allocation from autos which spiked during the “cash for clunkers” program of a year ago.

The Silicon Valley continues to lead the recovery with gains 2 ½ times higher than for California as a whole. Coastal region sales are generally outperforming the inland areas.

Sales Tax Picture at Mid-Year

The first two quarters of 2010-11 produced statewide receipts that are 4.2 percent higher than the first two quarters of 2009-10 after accounting aberrations are excluded. However, the year-to-date total is still 17.2 percnet lower than the totals for the first two quarters of pre-recession 2006-07.

Generally, prognostications for the remaining fiscal year are more upbeat than those of a few months ago and the fears of a double-dip recession have diminished. Stocks are at a two-year high, preliminary data on fourth quarter business and consumer spending is better than anticipated and the recent tax-cuts and extension of unemployment benefits is hoped to boost the nation’s econoy by $850 billion.

In California, the growth in sales tax will be geographically uneven and tempered by high unemployment, mortgage foreclosures and fallout from the state’s budget deficit.

Various segments of the sales tax base are projected as follows:

Autos/Transportation – Industry sales reports were inflated by non-taxable fleet purchases earlier in the year but pent-up demand and easing credit are now producing solid consumer demand and new optimism. Positive gains are expected over the next few quarters but not at pre-recession growth rates.

Building/Construction – Unsold inventories, new tax exemptions for energy projects and modest public spending translate into flat or minimal tax growth for another year or more.

Business/Industry – Leaner and flush with cash, businesses are investing heavily with new technology, software and equipment. Sales tax gains will be agency and industry specific and primarily from suppliers of technology and companies serving the health, mining, petroleum and food industries.

Food/Drugs – some price increases but competition will keep tax revenues from this segment generally flat.

Fuel/Service Stations – Speculation on crude oil futures is resulting in price increases that are expected to continue to soar through spring.

Consumer Goods – Stock market gains are reviving luxury buyers while “frugality fatigue” is setting in for the rest of us. Holiday spending was stronger than expected for apparel, sporting goods, small electronics, and home furnishings. Analysts are skeptical about sustainability but generally project statewide growth of 3-3.5 percent.

Restaurants/Hotels – Tourism and business travel is on the increase but price competition is expected to keep gains in sales tax revenue relatively modest.