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Home My WebLink AboutFIN 2018-07-05 Item 2D - Report - 2018 1st Quarter Report: Sales Tax and Miscellaneous RevenueCity of Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM TO: Finance Committee FROM: Peggy McCarthy, Finance Director CC: Mayor Ekberg DATE: June 25, 2018 SUBJECT: Sales Tax and Miscellaneous Revenue Report -1st Quarter 2018 Schedule I - Sales Tax in $1,000's First quarter sales tax collections increased by $33 thousand or 1`)/0 over the same period in 2017. Construction sales tax increased $50 thousand or 15% and other industries decreased by $17 thousand. 39 2017 Actual 2018 Actual YOY Change j j j j j i Other ---- Month ---- ! Other ! Total ! Other ! Total Construction ! Industries ! Total Collect- Construct i Construct j i i ed Recd tion Industries ; tion � Industries ; Amount % ;Amount % ; Amount , Jan Mar $ 123 j $ 1,149 j $ 1,272 $ 116 j $ 1,222 j $ 1,339 $ (6) -5%j $ 73 6%i $ 67 5% Feb Apr 83 j 1,123 j 1,206 128 j 1,210 j 1,338 45 54%j 87 8%i 132 11% Mar May 120 i 1,664 1,784 131 1,487 1,618 11 9%i (177) -11% (166) -9% Q-1 Totals $ 326 ; 3,936 ; $ 4,262 $ 375 ; 3,919 ; $ 4,295 $ 50 15%; (17) 0%; $ 33 1% Apr Jun May Jul 90! 1,317 ! 103 ! 1,318 ! 1,408 1,421 - - - - - - - - - - - Jun Aug 116 ! 1,391 ! 1,506 - - - - - I - Q-2 Totals $ 309 j 4,026 i $ 4,335 $ - - $ - $ - - i $ - Jul Sep 130 j 1,377 i 1,508 - - - - - i - Aug Oct 125 1,345 1,471 - j - j - - i - i - Sep Nov 140 1,473 1,613 - Q-3 Totals $ 396 ; 4,196 ; $ 4,591 $ - - $ - $ - - ; $ - Oct Dec 145 , 1,329 , 1,473 - i i Nov Jan 110 ! 1,424 ! 1,534 - - - - - - Dec Feb 120 ! 1,849 ! 1,969 - j - - - - - Q-4 Totals $ 374 j 4,602 i $ 4,976 $ - j - $ - $ - - i $ - Totals $ 1,404 j 16,760 j $ 18,164 $ 375 j 3,919 j $ 4,295 $ 50 i (17) i $ 33 First quarter sales tax collections increased by $33 thousand or 1`)/0 over the same period in 2017. Construction sales tax increased $50 thousand or 15% and other industries decreased by $17 thousand. 39 INFORMATIONAL MEMO Page 2 Budget to Actual - Sales Tax in $1,000's Schedule I - Sales Tax Actual sales tax collected in the first quarter was $382 thousand less than anticipated, representing an 8% negative variance from budget. The results are consistent with the sales tax performance against budget experienced in 2017. Based on the first quarter results, it appears the 2018 budget for sales tax revenue will not be met. 40 W:\FIN Projects\Sales Tax Information12018\Info Memo Sales Tax-2018-Q1.docx -- Month -- Collected Rec'd 2017 2018 Variance Actual Allocated Budget Actual Amt % Jan Mar $ 1,272 $ 1,396 $ 1,339 (57) -4% Feb Apr 1,206 $ 1,323 $ 1,338 15 1% Mar May 1,784 $ 1,958 $ 1,618 (340) -17% 0-1 Totals $ 4,262 $ 4,677 $ 4,295 $(382) -8% Apr Jun 1,408 $ 1,545 - - May Jul 1,421 $ 1,559 - - Jun Aug 1,506 $ 1,653 - - Q-2 Totals $ 4,335 $ 4,757 $ - $ - Jul Sep 1,508 $ 1,654 - - Aug Oct 1,471 $ 1,614 - - Sep Nov 1,613 $ 1,770 - - Q-3 Totals $ 4,591 $ 5,038 $ - $ - Oct Dec 1,473 $ 1,617 - - Nov Jan 1,534 $ 1,683 - - Dec Feb 1,969 $ 2,161 - - Q-4 Totals $ 4,976 $ 5,461 $ - $ - Totals $ 18,164 $ 19,932 $ 4,295 $(382) -2% Actual sales tax collected in the first quarter was $382 thousand less than anticipated, representing an 8% negative variance from budget. The results are consistent with the sales tax performance against budget experienced in 2017. Based on the first quarter results, it appears the 2018 budget for sales tax revenue will not be met. 40 W:\FIN Projects\Sales Tax Information12018\Info Memo Sales Tax-2018-Q1.docx INFORMATIONAL MEMO Page 3 Below is a graph of the year-to-date changes in sales tax collections by industry type year over year. $150,000 $100,000 $50,000 $(50,000) $(100,000) $(150,000) $(200,000) $(250,000) Change YTD by Category* All industry categories show an increase in sales tax except for automotive, with a $23 thousand decline, and miscellaneous with a $220 thousand decline. The miscellaneous category contains sales tax from periodic and one time type transactions. If this decline were factored out of the year over year change, sales tax for 1st quarter 2018 would have shown an increase of over $250 thousand. In comparison, if the 1st quarter 2017 increase in the miscellaneous category were factored out of the year over year change, sales tax for 1st quarter 2017 would have shown a decline of $59 thousand. In comparison, 1st quarter 2018 exhibits a more promising and positive trend in ongoing sales tax collections. Some of the increase experienced in 2018 may be due to the change in state legislation effective January 1, 2018 that subjects more online sales to sales tax collection. See the excerpt below from news cni awcnet.orq, June 21, 2018. "On June 21st, the Supreme Court of the United States released an opinion that allows states to collect sales tax on goods sold from remote out-of-state sellers. The opinion reverses the physical presence standard set in prior cases. The decision will likely have limited impact in the State of Washington. However, this ruling affirms the Washington State Legislature's bipartisan actions in 2017 that resulted in more than $400 million to state and local governments thus far. EHB 2163 directed the Department of Revenue (DOR) to work with remote out-of-state companies to comply with remitting sales tax or provide information on purchasers for remitting use tax. DOR began collecting sales tax from remote out- of-state sellers in 2018." W:1FIN Projects\Sales Tax Information120181Info Memo Sales Tax-2018-Q1.docx 41 Retail Trade Services $86,555 Construction $49,316 WholesaleTrade $44.,802 $84,19/ Manufacturing $10,790 MM Transportation /Warehousing $1,217 Automotive $(23,416) Miscellaneous , 111(11(2,1 All industry categories show an increase in sales tax except for automotive, with a $23 thousand decline, and miscellaneous with a $220 thousand decline. The miscellaneous category contains sales tax from periodic and one time type transactions. If this decline were factored out of the year over year change, sales tax for 1st quarter 2018 would have shown an increase of over $250 thousand. In comparison, if the 1st quarter 2017 increase in the miscellaneous category were factored out of the year over year change, sales tax for 1st quarter 2017 would have shown a decline of $59 thousand. In comparison, 1st quarter 2018 exhibits a more promising and positive trend in ongoing sales tax collections. Some of the increase experienced in 2018 may be due to the change in state legislation effective January 1, 2018 that subjects more online sales to sales tax collection. See the excerpt below from news cni awcnet.orq, June 21, 2018. "On June 21st, the Supreme Court of the United States released an opinion that allows states to collect sales tax on goods sold from remote out-of-state sellers. The opinion reverses the physical presence standard set in prior cases. The decision will likely have limited impact in the State of Washington. However, this ruling affirms the Washington State Legislature's bipartisan actions in 2017 that resulted in more than $400 million to state and local governments thus far. EHB 2163 directed the Department of Revenue (DOR) to work with remote out-of-state companies to comply with remitting sales tax or provide information on purchasers for remitting use tax. DOR began collecting sales tax from remote out- of-state sellers in 2018." W:1FIN Projects\Sales Tax Information120181Info Memo Sales Tax-2018-Q1.docx 41 INFORMATIONAL MEMO Page 4 Schedule II shows year-to-date sales tax collections from the top ten industry classifications. Schedule II YTD YTD Dollar Group Name Current Prior Diff. Diff. 722 Food Services, Drinking Places $ 473,018 $ 436,557 $ 36,461 8.35% 452 General Merchandise Stores $ 455,541 $ 453,426 $ 2,115 0.47% 448 Clothing and Accessories $ 444,860 $ 420,321 $ 24,539 5.84% 443 Electronics and Appliances $ 268,175 $ 271,010 $ (2,835) -1.05% 423 Wholesale Trade, Durable Goods $ 261,090 $ 218,958 $ 42,132 19.24% 236 Construction of Buildings $ 257,085 $ 184,318 $ 72,767 39.48% 541 Professional, Scientific, Tech $ 193,198 $ 113,979 $ 79,219 69.50% 453 Miscellaneous Store Retailers $ 182,668 $ 166,266 $ 16,402 9.86% 444 Building Material and Garden $ 173,136 $ 160,425 $ 12,711 7.92% 517 Telecommunications $ 169,757 $ 155,761 $ 13,996 8.99% 722 -Food Services, Drinking Places has risen to the top of the list with 452 -General Merchandise Stores and 448 - Clothing and Accessories a close second and third respectively. In comparison, for 1st quarter 2017, the top industry categories were 452 -General Merchandise Stores, 722 -Food Services, Drinking Places and 448 -Clothing and Accessories. For 1st quarter 2016, the top industrycategories were 452 -General Merchandise Stores, 448 -Clothing and Accessories, and 722 -Food Services, Drinking Places. Category 722 -Food Services, Drinking Places has moved from third highest sales tax collections in 2016 to highest sales tax collections in 2018. 42 W:1FIN Projects\Sales Tax Information120181Info Memo Sales Tax-2018-Q1.docx INFORMATIONAL MEMO Page 5 Schedule III shows the year-to-date ten largest declines in sales tax collections by dollar difference by industry collected. Schedule III YTD YTD Dollar Group Name Current Prior Diff. Diff. 999 Nonclassifiable Establishments $ 47,951 $ 268,240 $ (220,289) -82.12% 441 Motor Vehicle and Parts Dealer $ 145,985 $ 171,570 $ (25,586) -14.91% 238 Specialty Trade Contractors $ 107,058 $ 125,720 $ (18,662) -14.84% 621 Ambulatory Health Care Service $ 21,757 $ 35,451 $ (13,693) -38.63% 532 Rental and Leasing Services $ 143,648 $ 157,335 $ (13,687) -8.70% 926 Economic Programs Admin $ 5,050 $ 18,615 $ (13,566) -72.87% 488 Transportation Support $ 7,894 $ 13,822 $ (5,928) -42.89% 713 Amusement, Gambling, and Rec $ 52,783 $ 58,213 $ (5,430) -9.33% 237 Heavy and Civil Construction $ 10,984 $ 15,774 $ (4,790) -30.36% 515 Broadcasting (except Internet) $ 1,301 $ 5,876 $ (4,576) -77.86% The largest decline was in the 999-Nonclassifiable Establishments industry category (also referred to as the miscellaneous category). No trend was detected by comparing the information above with the ten largest declines for 1st quarter 2017 and 2016. However, category 621 - Ambulatory Health Care Services appears above and on the 1st quarter 2017 list and category 441 -Motor Vehicle and Parts Dealer appears above and on the 1st quarter 2016 list. W:1FIN Projects\Sales Tax Information120181Info Memo Sales Tax-2018-Q1.docx 43 W:\FIN Projects\Sales Tax Information120181Info Memo Sales Tax-2018-Q1.docx SALES TAX SUMMARY 1st Quarter 2018 (Received in March 2018 - May 2018) NAICS CONSTRUCTION 236 Construction of Buildings 237 Heavy & Civil Construction 238 Specialty Trade Contractors TOTAL CONSTRUCTION 17 TOTAL 844,136 107,260 462,376 $ 1,413,773 $ Overall Construction Change from Previous Year MANUFACTURING 17 TOTAL 17 YTD 184,318 15,774 125,720 325,812 $ 311 Food Manufacturing 10,703 312 Beverage & Tobacco Products 11,960 313 Textile Mills 409 314 Textile Product Mills 14,792 315 Apparel Manufacturing 888 316 Leather & Allied Products 88 321 Wood Product Manufacturing 3,740 322 Paper Manufacturing 24,646 323 Printing & Related Support 28,490 324 Petroleum & Coal Products 41 325 Chemical Manufacturing -15,834 326 Plastic & Rubber Products 3,955 327 Nonmetallic Mineral Products 5,081 331 Primary Metal Manufacturing 1,803 332 Fabricated Metal Mfg Products 8,752 333 Machinery Manufacturing 6,300 334 Computer& Electronic Products 10,531 335 Electric Equipment, Appliances 3,949 336 Transportation Equipment Mfg 29,297 337 Fumiture & Related Products 8,432 339 Miscellaneous Manufacturing 19,765 TOTAL MANUFACTURING $ 177,788 $ Overall Manufacturing Change from Previous Year 17YTD 1,932 4,477 130 3,579 242 8 469 6,276 6,539 4 1,494 1,093 726 266 3,840 1,386 2,955 2,796 8,895 1,417 3,795 52,318 TRANSPORTATION & WAREHOUSING 17 TOTAL 17 YTD 481 482 483 484 485 487 488 491 492 493 Air Transportation Rail Transportation Water Transportation Truck Transportation Transit and Ground Passengers Scenic and Sightseeing Tran Transportation Support Postal Services 11 169 86 1,852 395 57 47,071 816 Couriers & Messengers 1,600 Warehousing & Storage 1,878 TOTAL TRANSP & WHSING $ 53,936 $ Overall Transportation Change from Previous Year WHOLESALE TRADE 17 TOTAL 11 94 21 379 53 15 13,822 226 361 375 15,356 $ 16,573 $1,217 7.9% 18 YTD 257,085 10,984 107,058 375,128 $49,316 15.1% YTD % Diff 39.5% -30.4% -14.8% YTD 18 YTD % Diff 1,944 2,830 61 3,383 15 12 384 6,852 6,333 29 1,514 852 830 469 1,922 2,814 3,671 799 17,875 2,281 8,239 $ 63,108 $10, 790 18 YTD 0 13 3 528 221 6,366 7,894 126 882 541 0.6% -36.8% -53.4% -5.5% -94.0% 51.4% -17.9% 9.2% -3.1% 598.6% 1.3% -22.1% 14.3% 76.6% -49.9% 103.1% 24.3% -71.4% 100.9% 61.0% 117.1% 20.6% YTD % Diff 0.0% -86.5% -87.6% 39.3% 319.3% 42971.3% -42.9% -44.2% 144.3% 44.3% YTD 17 YTD 18 YTD % Diff 423 Whls Trade -Durable Goods 424 WhIs Trade -Nondurable Goods 425 Wholesale Electronic Markets 1,018,477 155,695 2,696 WHOLESALE TRADE TOTAL $ 1,176,868 $ Overall Wholesale Change from Previous Year NAICS 441 447 NAICS 442 443 444 445 446 448 451 452 453 454 AUTOMOTIVE Motor Vehicle & Parts Dealer Gasoline Stations TOTAL AUTOMOTIVE 17 TOTAL 709,541 91,039 $ 800,581 $ Overall Automotive Change from Previous Year RETAIL TRADE Furniture & Home Fumishings Electronics & Appliances Building Material & Garden Food & Beverage Stores Health & Personal Care Clothing & Accessories Sporting Goods, Hobby, Books General Merchandise Stores Miscellaneous Store Retailers Nonstore Retailers TOTAL RETAIL TRADE 17 TOTAL 445,454 1,168,189 805,251 257,762 298,682 2,066,870 533,560 2,131,267 738,487 248,748 $ 8,694,271 $ Overall General Retail Change from Previous Year SERVICES 17 YTD 171,570 20,418 191,988 17 YTD 106,163 271,010 160,425 54,826 68,870 420,321 109,225 453,426 166,266 37,237 1,847,767 17 TOTAL 17 YTD 51X Information 52X Finance & Insurance 53X Real Estate, Rental, Leasing 541 Professional, Scientific, Tech 551 Company Management 56X Admin, Supp, Remed Svcs 611 Educational Services 62X Health Care Social Assistance 71X Arts & Entertainment 72X Accommodation & Food Svcs 81X Other Services 92X Public Administration TOTAL SERVICES 820,832 106,045 623,983 547,039 9 170,046 10,355 119,513 256,620 2,536,470 270,882 87,143 $ 5,548,937 $ Overall Services Change from Previous Year MISCELLANEOUS 17 TOTAL 198,303 21,668 166,237 113,979 0 37,529 1,508 43,895 64,720 571,704 63,656 20,925 1,304,124 $ 1,390,679 18 YTD 145,985 22,588 $ 168,572 ($23,416) 18YTD 106,867 268,175 173,136 62,957 69,432 444,860 127,637 455,541 182,668 40,691 $ 1,931,964 $84,197 18 YTD 203,572 23,197 150,394 193,198 1 54,566 1,608 30,165 59,057 605,789 62,117 7.017 000 111-115 211-221 999 Unknown Agriculture, Forestry, Fishing Mining & Utilities Unclassifiable Establishments MISCELLANEOUS TOTAL 0 1,089 547 296,439 $ 298,074 $ Overall Miscellaneous Change from Previous Year 17 YTD 0 80 102 268,240 268,422 YTD % Diff -14.9% 10.6% -12.2% % Diff 0.7% -1.0% 7.9% 14.8% 0.8% 5.8% 16.9% 0.5% 9.9% 9.3% 4.6% YTD % Diff 2.7% 7.1% -9.5% 69.5% 0.0% 45.4% 6.6% -31.3% -8.7% 6.0% -2.4% -66.5% $86,555 66% YTD 18 YTD % Diff 0 61 115 47,951 $ 48,127 ($220,295) 0.0% -23.4% 12.5% -82.1 % -82.1% 218,958 261,090 19.2% YTD 36,601 39,266 7.3% 17 TOTAL 17 YTD % Diff 624 628 0.7% GRAND TOTALS $18,164,227 $4,261,971 $4,295,137 18 YTD 256,183 $ 300,985 Grand Total Change from Previous Year $33,166 0.78% $44,802 17.5% Grand Total Change from Previous Year - Without New Construction ($16,150) -0.41% INFORMATIONAL MEMO Page 6 Schedule IV shows quarterly gambling tax performance year over year and for the current year compared to budget. Schedule IV - Gambling Tax (a) (d) 2018 Quarter 2017 2018 Allocated Earned Actual Actual Budget INCREASE (DECREASE) YEAR OVER YEAR BUDGET VARIANCE Amount % Amount Q1 $ 977,003 $ 985,901 $ 995,831 Q2 983,322 1,002,272 Q3 951,991 970,337 Q4 958,503 976,974 $ 8,898 1% $ (9,930) -1% Totals $ 3,870,819 $ 985,901 $ 3,945,414 $ 8,898 -75% $ (9,930) -75% Gambling tax revenue was 1% more than the same period last year and 1% less than budget. The City now has four casinos - the Riverside Inn, the Great American, the Fortune (formerly the Golden Nugget) and the Macau. Gambing tax is budgeted to increase by 2% over 2017 actual revenue. Schedule V shows quarterly admissions tax performance year over year and for the current year compared to budget. Schedule V - Admissions Tax (b) (d) 2018 Quarter 2017 2018 Allocated Earned Actual Actual Budget INCREASE (DECREASE) YEAR OVER YEAR BUDGET VARIANCE Amount % Amount Q1 $ 166,003 $ 206,037 $ 176,211 Q2 157,574 167,263 Q3 177,422 188,331 Q4 171,641 182,195 $ 40,034 24% $ 29,826 17% Totals $ 672,640 $ 206,037 $ 714,000 $ 40,034 -69% $ 29,826 -71% First quarter admissions tax revenue was $40 thousand, or 24% more than the same period last year. The year over year increase also represents a favorable budget variance of $30 thousand or 17%. A major contributor to the increase is a new entertainment venue in the Central Business District. Admissions tax is budgeted to increase 6% over 2017 actual revenue. Schedule VI shows quarterly telecommunications utility tax performance year over year and for the current year compared to budget. Schedule VI - Telecommunications Utility Tax (c) (d) 2018 Quarter 2017 2018 Allocated Earned Actual Actual Budget INCREASE (DECREASE) YEAR OVER YEAR BUDGET VARIANCE Amount % Amount cyo Q1 $ 323,708 $ 393,366 $ 319,585 Q2 312,456 308,476 Q3 388,433 383,486 Q4 316,497 312,466 $ 69,658 22% $ 73,781 23% Totals $ 1,341,094 $ 393,366 $ 1,324,013 $ 69,658 -71% $ 73,781 -70% First quarter telecommunications utility tax was $70 thousand, or 22% more than previous year and $74 thousand more than budget. The 2018 revenue is budgeted at 1% less than 2017 actual revenue. (a) (b) (c) (d) Gambling tax currently includes card games, punch boards, pull tabs, and amusement games. Excludes golf course admissions tax. Telecommunications Utility tax currently includes cellular, pager and telephone usage. Actuals reflected in Schedules IV, V and VI are amounts earned for the quarter. W:1FIN Projects\Sales Tax Information120181Info Memo Sales Tax-2018-Q1.docx 45