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Home My WebLink AboutFIN 2019-07-08 Item 2A - Report - 2019 1st Quarter Sales Tax and Miscellaneous Revenue Report4:%1411„..4 10, 29oe, City of Tukwila INFOR ATIONAL E ORANDU TO: Finance Committee FROM: Vicky Carlsen, Finance Director BY: Aaron Williams, Fiscal Coordinator CC: Mayor Ekberg DATE: June 28, 2019 SUBJECT: Sales Tax revenue - March 2019 Year Over Year Sales Tax Comparison: Schedule I - Sales Tax Allan Ekberg, Mayor in $1,000s 2018 Actual 2019 Actual YOY Change - Month - Collect- ed Rec'd 1 ! I i ! Other ! Construe; I bon i Industries i Total 1 ! I i : Other I i Construe, , :Industries: bon I I Total , ! ! i Other i ConstructionI Industries . Total I Amount % :Amount % : Amount i 1 % Jan Feb Mar Mar Apr May $ 116 ! $ 1,222 ! 128 ! 1,211 ! 131 i 1,487 i $ 1,339 1,338 1,618 $ 140 ! $ 1,225 ! 62 I 1,252 i . 102 i 1,565 i $ 1,365 1,314 1,668 $ 23 20%! (66) -51%! (29) -22%i $ 2 41 78 0%! $ 26 3°/0(25) 5%i 50 2% -2%! 3% Q-1 Totals 9 375 i 3,920 i $ 4,295 $ 304 i 4,042 l $ 4,346 $ (71) -19%i 122 3%i 1% Apr May Jun Jun Jul Aug 122 i 1,349 i 134 ! 1 492 ! 139 : 1,682 ! 1,471 1' 626 1,821 , , - - - ! l ! ! Q-2 Totals $ 395 ! 4,524 ! $ 4,919 - - - - i - 0%! - 0% Jul Aug Sep Sep Oct Nov 136 ! 1,678 ! 124 1 1,682 ! 163 i 1.619 i 1,814 1,805 1,782 1 - - - ! , I ! Q-3 Totals $ 423 1 4,979 i $ 5,402 8 - - $ - $ - 0%1 - 0% $ - 0% Oct Nov Dec Dec Jan Feb 129 i 1,446 152 ' 1,487 ' i 149 : 1.916 : 1,574 1' 639 2,065 - - - 1 ! , ! ! Q-4 Totals $ 429 ! 4,849 ! $ 5,278 $ - , - 0%! - 0%! $ - 0% Totals $ 1, 2 ! 18,271 ! $ 19,895 $ 304 ! 4,042 ! $ 4,346 $ (71) -4%! 122 1%! $ 51 0% Through the first quarter of 2019 Sales tax is up $50,800 compared to the first quarter of 2018. During the first quarter there were two events that likely had a negative impact on consumer spending behaviors (snowstorm and government shutdown). Additionally, the revision of the tax laws for 2018 resulted in many households receiving a smaller tax refund or having to pay the IRS, which also had an impact on spending. While the City sales tax collections are up compared to the first quarter of the prior year, Retail Trade categories are underperforming compared to last year by more than $87k. The Clothing and Accessories (-10.9%) and Sporting Goods (-22%) categories represent the largest declines in this group. The City did receive additional 1 INFORMATIONAL MEMO Page 2 sales taxes in the Motor Vehicle and Parts Dealers category (bus manufacturer) during February and March, which helped offset the underperformance of retail and trade categories. Construction sales tax is almost $71 k less than the amount collected in the first quarter of last year. Most of this decline occurred February which was $66k down; this can be attributed to the delays related to the snowstorms. The current 'construction boom' in the region has continued despite signs of a slowdown ahead. The most recent City of Tukwila building permit activity indicates that thorough May 2019 the value of permits issued YTD is nearly 80% of the total value of permits issued during 2018 and already exceeds the value issued in 2017. Based on a June 12 King County Economic update, the overall US economy has been in an expansion for ten years, but the rate of growth has been historically low. Trade policies and tariffs have caused uncertainty in the many sectors of the economy as well as a slowdown in the global economy. Forecasts have been recently revised downward based on economic indicators (see chart below) and expectations are for lower growth in 2019. What this means for the City of Tukwila is that we should not expect to see the same kind of sales tax growth that we experienced in 2018. OE FA Kin Cotzty King County Economic Indicators 2018 Actuols & 2019 YTD & 20 Year Average Source: PSEF. Cose-Sliffler, WA DOR. ULS 14% 13% 1291) 11% 10 % 9% 8% 7% 6% 5% 3% 2.7%, 2% 0% ---- ' Employment Growth House Prices Taxable Sales 0 2016 Actual 2019 YTD 020 year average .6% 4.2% Inflation 2 INFORMATIONAL MEMO Page 3 Budget to Actual Sales Tax Comparison: Schedule I - Sales Tax in $1,000's Month - Collected Rec'd Jan Mar Feb Apr Mar May Q-1 Totals 2018 2019 Variance Actual 1,339 1,338 1,618 4,295 Allocated Actual Budget $ 1.339 $ 1,365 1,338 $ 1,314 $ 1.618 $ 1,668 4,295 $ 4,346 Amt 26 2% (25) -2% 50 3% 51 1% Apr Jun May Jul Jun Aug Q-2 Totals 1.471 1,626 1.821 4,919 $ 1.471 8 1,626 $ 1,821 $ 0% Jul Sep Aug Oct Sep Nov 0-3 Totals 1,814 1,805 1,782 5,402 8 1,814 1,805 $ 1,782 5,402 $ 0% Oct Dec Nov Jan Dec Feb 1,574 1,639 2,065 $ 1,574 $ 1,639 $ 2.066 Q-4 Totals 5,278 5,279 $ Totals $ 19,894 $ 19,894 $ 4,346 $ 51 0% The 2019 budget for sales taxes is $19.894 million, which is nearly equal to total collections for 2018. Through the first quarter of 2019 sales tax collections are $50,802 greater than the budget. 3 INFORMATIONAL MEMO Page 4 $ 300,000 S250,000 S200,000 S150,000 $100,000 $50,000 5- $(50,C00 $(100,000 $(150,000) Change YTD by Category Automotive Transport /Warehousing ($362) Construction $(70,905) $270,605 Retail Trade $(87,307) Services Miscellaneous $(12,967) $(12,857) The chart above compares the change in current year-to-date taxes vs the same period of the prior year. Through the first quarter, most categories are down, some of which can be attributed to the events mentioned earlier. The standout category, Automotive, includes sales taxes related to King County Metro bus deliveries to the Tukwila bus base. These deliveries have been boosting the 441-Motor Vehicle and Parts Dealer category since May 2018; the prior year-to-date comparison does not include any of those tax payments. Through the first quarter, these additional taxes received for buses totals approximately $270k. April sales tax collections (received in June) were $95k higher than the prior year; some groups have made improvements while other categories are still recovering from earlier losses. Staff will continue to watch these categories closely over the next quarter and report on any trends developing. 4 INFORMATIONAL MEMO Page 5 Schedule II - YTD sales tax collections - top ten industry classifications YTD YTD Dollar Group Name Current Prior Diff. Diff. 722 Food Services, Drinking Places 5 480,139 S 473,018 5 7,121 1.51 % 452 General Merchandise Stores S 437,002 5 4.55,541 3 (18,540) -4.07% 441 Motor Vehicle and Parts Dealer 5 417,917 5 145,985 5 271,933 186.27% 448 Clothing and Accessories 5 396,190 S 444,860 9 (48,670) -10.94% 443 Electronics and Appliances 5 244,269 S 268,175 5 (23,906) -8.91% 423 Wholesale Trade, Durable Goods 5 237,179 $ 261,090 5 (23,911) -9.16% 236 Construction of Buildings 5 204,336 5 257,086 5 (52,749) -20,52% 453 Miscellaneous Store Retailers s 202,394 5 182,668 5 19,726 10.60% 444 Building Material and Garden s 181,644 5 173,136 5 8,508 4,9196 541 Professional. Scientific, Tech 5 161,117 5 193,198 S (32,061) -16.61% These top ten industry classifications remain relatively stable from prior years. Many of these groups are currently down compared to last year but are expected to level out later in the year. Schedule III - YTD ten largest declines ($) in sales tax collections by industry class YTD YTD Dollar Group Name Current Prior Diff. Diff. 236 Construction of Buildings 5 204,336 5 257,085 S (52,749) -20.52% 448 Clothing and Accessories s 3 w.,190 5 444860 5 (48,670) -10.94% 517 Telecommunications s 134,894 5 169,757 5 (34,662) -20.54% 541 Professional, Scientific. Tech s 161,117 5 193,198 S (32,081) -16.61% 451 Sporting Goods, Hobby, Books s 99,599 5 127,637 5 (28,037) -21.97% 423 Wholesale Trade. Durable Goods 5 237179 5 261,090 5 (23,911) -9.16% 443 Electronics and Appliances 5 244,269 S 268,175 S (23,906) -8.9196 522 Credit Intermediation s 1,402 5 21,868 S (20,467) -93.59% 452 General Merchandise Stores s 437,002 5 455,541 5 (18,540) -4.07% 238 Specialty Trade Contractors s 90,569 5 107,058 5 (16,489) -15.40% The chart above shows the ten largest declines compared to the prior year. Several of the groups with large declines are also listed in the top ten list in Schedule II. 5 INFORMATIONAL MEMO Page 6 SALES TAX SUMMARY lst Quarter 2019 Collections (Received in Mar - May 2019) NAICS CONSTRUCTION 236 Construction of Buildings 237 Heavy & Civil Construction 238 Specialty Trade Contractors TOTAL CONSTRUCTION 18 TOTAL 18 YTD 19 YTD 1,028,985 257,085 204,336 73,288 10,984 9,318 520,840 107,058 90,569 $ 1,623,112 $ 375,128 $ 304,223 Overall Construction Change from Previous Year $ (70,905) -18.9% MANUFACTURING 18 TOTAL 18 YTD 19 YTD YTD % Diff -20.5°A, -15.2% -15.4% YTD % Diff 311 Food Manufacturing 312 Beverage & Tobacco Products 313 Textile Mills 314 Textile Product Mills 315 Apparel Manufacturing 316 Leather & Allied Products 321 Wood Product Manufacturing 322 Paper Manufacturing 323 Printing & Related Support 324 Petroleum & Coal Products 325 Chemical Manufacturing 326 Plastic & Rubber Products 327 Nonmetallic Mineral Products 331 Primary Metal Manufacturing 332 Fabricated Metal Mfg Products 333 Machinery Manufacturing 334 Computer & Electronic Products 335 Electric Equipment Appliances 336 Transportation Equipment Mfg 337 Furniture & Related Products 339 Miscellaneous Manufacturing TOTAL MANUFACTURING 25,347 12,739 234 10,477 668 63 2,780 24,921 18,725 90 5,207 7,207 5,225 1,169 10,044 7,720 27,781 14,910 46,543 9,130 31,721 $ 262,700 $ 1,944 6,078 2,830 2,466 61 8 3,383 3,744 15 129 12 20 384 619 6,852 5,535 6,333 3,758 29 23 1,514 1,121 852 2,129 830 1,187 469 513 1,922 1,115 2,814 1,115 3,671 3,312 799 1,214 17,875 10,475 2,281 2,385 8,239 6,315 63,108 $ 53,263 Overall Manufacturing Change from Previous Year 09845) TRANSPORTATION & WAREHOUSING 481 Air Transportation 482 Rail Transportation 483 Water Transportation 484 Truck Transportation 485 Transit and Ground Passengers 487 Scenic and Sightseeing Tran 488 Transportation Support 491 Postal Services 492 Couriers & Messengers 493 Warehousing & Storage TOTAL TRANSP & WHSING 212.6% -12.8% -87.5% 10.7% 791.9% 69.0% 61.0% -19.2% -40.7% -21.0% -25.9% 149.9% 43.1% 9.3% -42.0% -60.4% -9.8% 51.9% -41.4% 4.6% -23.4% -15.6% YTD 18 TOTAL 18 YTD 19 `VTD % Diff 2 80 1,622 2,537 715 7,549 38,474 1,034 1,816 2,362 $ 56,191 $ 0 0 13 8 3 245 528 755 221 434 6,366 252 7,894 12,948 126 206 882 955 541 407 16,573 $ 16,211 Overall Transportation Change from Previous Year ($362) WHOLESALE TRADE 18 TOTAL 18 YTD 19 YTD 423 WhIs Trade -Durable Goods 424 Whls Trade -Nondurable Goods 425 Wholesale Electronic Markets WHOLESALE TRADE TOTAL 1,126,051 261,090 237,179 180,401 39,266 37,471 2.719 628 772 $ 1,309,170 $ 300,985 $ 275,423 Overall Wholesale Change from Previous Year ($25,562) 0.0% -33.3% 9304.2% 42.9% 96.1% -96.0% 64.0% 63.7% 8.3% -24.7% NAICS AUTOMOTIVE 441 Motor Vehicle & Parts Dealer 447 Gasoline Stations 18 TOTAL 1,287,283 98,001 18 YTD 19 YTD 145,985 417,917 22,588 21,260 YTD % Diff 186.3% -5.4% NAICS TOTAL AUTOMOTIVE $ 1,385,284 $ 168,572 $ 439,178 Overall Automotive Change from Previous Year $270,605 160.5% RETAIL TRADE 442 Furniture & Home Furnishings 443 Electronics & Appliances 444 Building Material & Garden 445 Food & Beverage Stores 446 Health & Personal Care 448 Clothing & Accessories 451 Sporting Goods, Hobby, Books 452 General Merchandise Stores 453 Miscellaneous Store Retailers 454 Nonstore Retailers 18 TOTAL 18 YTD 19 YTD % Diff 521,980 1,127,863 813,656 306,566 289,962 2,084,482 535,648 2,187,854 834,133 165,495 106,867 117,035 268,175 244,269 173,136 181,644 62,957 68,874 69,432 67,932 444,860 396,190 127,637 99,599 455,541 437,002 182,668 202,394 40,691 29,719 9.5% -8.9% 4.9% 9.4% -2.2% -10.9% -22.0% 4.1% 10.8% -27.0% TOTAL RETAIL TRADE $ 8,867,639 $ 1,931,964 $ 1,844,657 Overall General Retail Change from Previous Year ($87,307) 4.5% SERVICES YTD 18 TOTAL ISYTD 19 YTD % IOW 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 721 Accommodation 722 Food Services, Drinking Places 81X Other Services 92X Public Administration TOTAL SERVICES 959,342 203,572 190,225 143,696 23,197 -3,530 658,861 150,394 158,072 739,444 193,198 161,117 2 1 4 316,828 54,566 77,409 5,738 1,608 1,330 88,209 30,165 18,459 304,385 59,057 74,379 717,341 132,771 155,335 2,009,051 473,018 480,139 260,134 62,117 61,278 71,562 7,017 3,497 6,274,592 $ 1,390,679 $ 1,377,712 Overall Services Change from Previous Year ($12,967) -0.9% MISCELLANEOUS 18 TOTAL 18 YTD 19 YTD 000 Unknown 0 0 0 111-115 Agriculture, Forestry, Fishing 1,737 61 147 211-221 Mining & Utilities 693 115 289 999 Unclassifiable Establishments 113,390 47,951 34,834 MISCELLANEOUS TOTAL $ 115,820 $ 48,127 $ 35,270 -2.2% Overall Miscellaneous Change from Previous Year ($12,857) -26.7% -6.6% -115.2% 5.1% -16.6% 0.0% 41.9% -17.3% -38.8% 25.9% 17.0% 1.5% -1.4% -50.2% YTD % Diff -9.2% 4.6% 23.0% YTD % Diff 0.0% 140.2% 151.6% -27.4% YTD 18 TOTAL 18 YTD 19 YTD % Diff GRANO TOTALS $19,894,510 $4,295,137 $4,345,937 Grand Total Change from Previous Year $50,800 1.18% -8.5% Grand Total Change from Previous Year - Without New Construction $121,705 3.10% 6 INFORMATIONAL MEMO Page 7 Schedule IV - Gambling Tax (a) Quarter Earned Q1 $ Q3 Q4 W> 208 2019 Actual Actual 985,901 $ 399,638 841,104 885,438 943,242 2013 Allocated Budget i 1,130.363 964,350 1,129,833 1,081,454 |N YEAR OVER YEAR BUDGET VARIANCE Amount % Amount % Gambling taxes were up $13.7k U9Q compared to the same period in the prior year. Effective Jan 1st the tax rate for card rooms was increased from 1O% to1196.some ofthese gains are likely aresult of the increased tax rate. A closer look at the results of individual casino's shows that of the 4 local card rooms, tax payments from two were upvothe prior year while two were down. When compared to the allocated budget for the first quarter, gambling taxes were $130k (-12%) under the allocated budget. Schedule V (b) - Admissions Tax Quarter Earned b8 2018 209ctual Q1 $ 206,037 $ 272,52 C2 249,096 O3 209,385 Q4 277^S0G ARIANCE EAR OVER YEAR BUDGET Amount ' % AmOUnt 96 Totals u_ t $ 942,023 $ 272,521 $ 850.008 V Y °excludes golf course admissions tax Admission taxes remain strong, exceeding 2018-]1 by 006kor 32%. Movie theatre admission taxes which historically has been alarge part ofthis group, were down $14l}kcompared tnthe prior year. This was offset by growth in recreation type businesses that continue posting strong returns. Similar to other tax revonuaS, these first quarter revenues were impacted, to some extent, by the onoVvotOrnl events in February and the Government shutdown inJanuary. INFORMATIONAL MEMO Page 8 Schedule VI - Telecommunications Utility Tax (d) 2019 Quarter 2018 2019 Allocated Earned Actual Actual Budget Q1 $ 292,954 $ 236.604 $ 353,342 Q2 279,555 337,182 Q3 266,563 321,611 Q4 280,205 337,965 INCREASE (DECREASE) YEAR OVER YEAR BUDGET VARIANCE Amount Amount $ (56,360) -19% $ (116,738) _33% Totals ,119,276 $ 236,604 $ 1,350,000 $ (56,350) -5% $ (116,73 -9% During the first quarter, revenues were $56k less (-19%) than the prior year and more than $116k less (-33%) than the budget. Telecommunications Utility tax has been trending downward over the past few years, this is the result of changes in consumer behaviors and preferences. In recent years the trend in the industry has been moving away from voice calls, with text messaging becoming many individuals' primary form of communication. Many households have also gotten rid of their home land -lines' opting for mobile phone plans with unlimited minutes. Other local cities are experiencing a similar decline in their telecommunications taxes, with Renton, Kent and Auburn all reporting lower returns year -over -year. 8