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Home My WebLink AboutFIN 2019-09-09 Item 2A - Report - 2019 2nd Quarter Sales Tax and Miscellaneous Revenuel ly \y City of Tukwila �o 2 a Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM TO: Finance Committee FROM: Vicky Carlsen, Finance Director BY: Aaron Williams, Fiscal Coordinator CC: Mayor Ekberg DATE: September 9, 2019 SUBJECT: Sales Tax & Misc Revenues — 2' Quarter 2019 Year Over Year Sales Tax Comparison: ule I - Sales Tax in $1,000's 2018 Actual 2019 Actual YOY Change I I I I I Other —Month — j Other j Total j Other j Total Construction j Industries j Total Collect- Construc-; Construo-; ed Rec'd tion 1 Industries j tion 1 Industries ; Amount % ;.Amount % ; Amount % Jan Mar S 116 I $ 1,222 1 $ 1,339 S 140 I $ 1,225 I $ 1,365 $ 23 20%1 a 2 0%1 5 26 2% Feb Apr 128 ' 1,211 1,338 62 ; 1,252 j 1,314 (66) -51%; 41 3%; (25) -2°,10 Mar Ivl3y 131 ; 1.487 ; 1,618 102 ; 1.565 ; 1.668 (29) -22%; 78 5%; 50 3% Q-1 Totals S 375 I 3.920 I $ 4.295 S 304 1 4.042 I $ 4,346 S (71) -19%1 122 3%1 $ 51 1% Apr Jun 122 I 1.349 j 1,471 119 ; 1.447 1,566 (3) -2%i 98 7%; 95 6% May Jul 134 ; 1,492 ; 1,626 147 ; 1,356 ; 1,503 13 9°./0; (136) -9%; (123) -8% Jun Aug 139 ! 1.682 1,821 204 ! 1.647 ! 1,851 65 47%! (35) -2%! 29 2% Q-2 Totals $ 395 j 4.524 j $ 4,919 $ 470 j 4.450 i $ 4.920 $ 74 19%i (73) -2%j $ 1 0% Jul Sep 136 ; 1.678 ; 1.814 - Aug Oct 124 . 1,682 1,805 I I - I I Sep Nov 1631 1.619 1.782 I I - I 1 Q-3 Totals $ 423 I 4.979 $ 5.402 $ - - j $ - $ - 0%1 - 0%1 $ - 0% Oct Dec 129 ; 1,446 ; 1.574 - Nov Jan 1521 1,487 1,639 I I - I I Dec Feb 149 ; 1.916 j 2.065 I I - I I Q-4 Totals S 429 ; 4.849 ; $ 5.278 $ - ; $ - $ - 0%; - 0%; $ - 0% Totals $ 1.623 ! 18.271 , $19,895 $ 774 ! 8.492 , $ 9,266 S 3 0%! 48 0%! $ 52 0% Through the second quarter of 2019 sales tax is up $51,663 compared to the same period of 2018. The Construction related sales tax has rebounded from the first quarter and is currently $3,500 greater than the first half of 2018. While construction sales tax has recovered, other sectors are still down year -over -year. Retail Trade and Wholesales Trade sales taxes are down $93k or (2.3%) and $92k or (13.9%), respectively. On the upside, sales taxes for Services is $109k or 3.7% higher than the prior year continuing the positive trend the City has experienced over the past few years in the Services sector. It is also noteworthy that during the past two months the City has not received any Metro bus delivery related sales taxes and we're still meeting budget. During 2018 and 2019 (ytd) the bus manufacturer related sales taxes has totaled $1.06 million, received primarily in 8 out of the past 14 months. INFORMATIONAL MEMO Page 2 Budget to Actual Sales Tax Comparison: Schedule I - Sales Tax in $1,000's 2018 2019 Variance - r Ionth - Actual Allocated Actual Collected Rec'd Budget Amt % Jan Mar $ 1.339 $ 1,339 $ 1,365 26 2% Feb Apr 1,338 $ 1,338 $ 1,314 (25) -2% tvlar relay 1,618 $ 1,618 $ 1,668 50 3% Q-1 Totals $ 4,295 $ 4,295 $ 4,346 $ 51 1% Apr Jun 1,471 $ 1,471 1,566 95 6% May Jul 1,626 $ 1,626 1,503 (123) -8% Jun Aug 1,821 $ 1,821 1,851 29 2% Q-2 Totals $ 4,919 $ 4,919 $ 4,920 $ 1 0% Jul Sep 1,814 $ 1,814 Aug Oct 1,805 $ 1,805 Sep Nov 1,782 $ 1,782 Q-3 Totals $ 5,402 $ 5,402 $ - $ - 0% Oct Dec 1,574 $ 1,574 Nov Jan 1,639 $ 1,639 Dec Feb 2,065 $ 2,066 Q-4 Totals $ 5,278 $ 5,279 $ - $ - 0% Totals $ 19,894 $ 19,894 $ 9,266 $ 52 0% The 2019 budget for sales taxes is $19.894 million, which is nearly equal to total collections for 2018. Through the second quarter of 2019 sales tax collections are $51,668 greater than the budget. This only slightly improves on the first quarter results, with the second quarter adding $866 greater than budget. INFORMATIONAL MEMO Page 3 $150,000 $10C,000 S50.0C 5 S;50,CCO) $ (IC 0,000) 54150,000) Change YTD by Category Automotive 5125,293 $109, Services _51 Construction Transport; Warehousing 53,445 $2,972 Miscellaneous $5,44 Ma nufacturing ${11,423J Wholesale Trade Retail Trade 5(90,213) $(93,011) The chart above compares the prior year-to-date totals to the current year-to-date totals for the eight major categories of sales tax. Two categories are performing significantly better than the prior year, Automotive and Services. Automotive is primarily driven by the bus manufacturer sales taxes, from which the City has received over $400k YTD. The Services category reflects a continued trend of growing sales tax collections related to food services and entertainment activities. On the flip side, there are two categories that are underperforming compared to the prior year, Wholesale trade and Retail trade. The decline in these two groups can be partly attributed to unanticipated events that occurred during the first quarter (snowstorm, tax law changes, federal gov't shutdown). Additionally, economic forecasts for 2019/2020 did anticipate slower growth in the US economy due to uncertainty surrounding federal tariffs and interest rates, resulting in lower consumer spending in general. INFORMATIONAL MEMO Page 4 Schedule II - YTD sales tax collections - top ten industry classifications Group Name 722 Food Services. Drinking Places 452 General Merchandise Stores 448 Clothing and Accessories 441 Motor Vehicle and Parts Dealer 236 Construction of Buildings 443 Electronics and Appliances 423 Wholesale Trade. Durable Goods 444 Building Material and Garden 453 Miscellaneous Store Retailers 721 Accommodation YTD Current S 1,011,584 S 917,603 S 871,894 S 882,5519 S 548,031 S 493,4.13 S 481,138 S. 415,488 S 405,508 S 3E4,126 YTD Dollar Prior Diff. Diff. S 973,229 S 965,46'7 S 935•,218 S 557,218 S 514,527 S 500,4'19 S 58•5,535 S 403,303 S 371,275 S 328,911 s 38,355 S (47,864) S (6'3,521) 5 125,301 S 31,504 S (7,006) S (84,397) S 12,18E 5 34,233 S 27,214 3.94% -4.96% -, 79% 22.49% 6.12% -1.40% - 14.92% 3.02% 9.22% 8.32°A These top ten industry classifications remain relatively stable from prior years. As noted on the prior page, the Wholesale trade and Retail trade groups are underperforming compared to the prior year. Several of these groups fall into those categories, including 452-General Merchandise, 448-Clothing and Accessories and 423- Wholesale Trade, Durable Goods. Schedule III - YTD ten largest declines ($) in sales tax collections by industry class Group Name 423 Wholesale Trade. Durable Goods 448 Clothing and Accessories 517 Telecommunications 452 General talerchandise Stores 451 Sporting Goods, Hobby, Books 522 Credit Intermediation 926 Economic Programs Admin 454 Nonstore Retailers 238 Specialty Trade Contractors 541 Professional. Scientific, Tech YTD YTD Dollar Current Prior Diff. Diff. 5 481,138 S 871,894 S 305,824 S 917,803. S 2266,448 S 30,344 S 41 S 60,604 S 204,516 S 292,504 S 565 535. S 935,216 S 35.5,433 S 965,487 S 264,'147 S 61,522 S 30,535 S 85,223 S 222,728 S 307,738 5 (84,397) S (63, 521) S (49,808) S (47,864) S (37,700) S (31,178) S (330,494) S (24,619) S (18,212) S (15,234) -14.92% -6.79% -14.01 % -4.96% - 14.27% - 50.68% - oG 87! % -28.89°A -8.18° °,° The chart above shows the ten largest declines compared to the prior year. Three of the groups in the top four of this chart are also in the top 10 industry classifications (sch II), raising concern about the developing trends in these categories. INFORMATIONAL MEMO Page 5 SALES TAX SUMMARY YTD through 2nd Qtr 2019 Collections (Received in Mar - Aug 2019) NAICS 236 237 238 CONSTRUCTION Construction of Buildings Heavy & Civil Construction Specialty Trade Contractors TOTAL CONSTRUCTION 18 TOTAL 1,028,985 73,288 520,840 18YTD 514,527 33,184 222,728 $ 1,623,112 $ 770,439 Overall Construction Change from Previous Year MANUFACTURING 18 TOTAL 18 YTD 19 YTD 546,031 23,337 204,516 $ 773,884 $ 3,445 0.4% YTD % Diff 6.1 % -29.7% -8.2 % YTD 19YTD %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 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 8,335 5,909 149 7,062 261 24 938 12,586 10,794 52 2,992 2,276 2,132 613 5,417 4,354 13,122 9,097 21,540 6,039 13,057 12,903 6,150 13 5,571 261 34 1,121 10,828 7,283 54 2,215 2,720 4,175 641 2,810 2,129 8,914 7,095 23,928 4,323 12,157 54.8% 4.1% -91.1 % -21.1 % 0.1 % 43.1% 19.5% -14.0% -32.5% 4.2% -26.0% 19.5% 95.8% 4.6% -48.1% -51.1 % -32.1% -22.0% 11.1% -28.4% -6.9 % TOTAL MANUFACTURING $ 262,700 $ 126,749 5 115,326 Overall Manufacturing Change from Previous Year ($11,423) -9.0% YTD TRANSPORTATION & WAREHOUSING 18 TOTAL 18 YTD 19 YTD % Diff NAICS AUTOMOTIVE 441 Motor Vehicle & Parts Dealer 447 Gasoline Stations 18 TOTAL 1,287,283 98,001 18 YTD 557,218 47,422 19YTD 682,519 47,419 YTD % Diff 22.5% 0.0% NAICS TOTAL AUTOMOTIVE $ 1,385,284 5 604,640 $ 729,938 Overall Automotive Change from Previous Year 6125,299 20.7% RETAIL TRADE 18 TOTAL 18YTD 19YTD %Diff 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 521,980 1,127,863 813,656 306,566 289,962 2,084,482 535,648 2,187,854 834,133 165,495 224,971 500,419 403,303 140,355 145,982 935,216 264,147 965,467 371,275 85,223 264,868 493,413 415,488 148,533 139,187 871,694 226,448 917,603 405,508 60,604 17.7% -1.4 % 3.0 % 5.8% -4.7% -6.8 % -14.3% -5.0 % 9.2% -28.9% TOTAL RETAIL TRADE $ 8,867,639 5 4,036,357 $ 3,943,346 Overall General Retail Change from Previous Year (593,011) SERVICES 18 TOTAL 18 YTD 19 YID -1.3 % YTD Diff 51X Information 959,342 52X Finance & Insurance 143,696 53X Real Estate, Rental, Leasing 658,861 541 Professional, Scientific, Tech 739,444 551 Company Management 2 56X Admin, Supp, Remed Svcs 316,828 611 Educational Services 5,738 62X Health Care Social Assistance 88,209 71X Arts & Entertainment 304,385 721 Accommodation 717,341 722 Food Services, Drinking Places 2,009,051 81X Other Services 260,134 92X Public Administration 71,562 450,457 64,040 310,792 307,738 143,565 3,061 50,009 150,027 326,911 973,229 129,731 35,278 536,851 26,139 348,293 292,504 37 157,607 2,851 36,842 156,286 354,126 1,011,584 123,070 7,800 19.2 % -59.2% 12.1 % -5.0 % 0.0 % 9.8% -6.9 % -26.3% 4.2 % 8.3% 3.9 % -5.1 % -77.9 % 481 Air Transportation 482 Rail Transportation 483 Water Transportation 484 Truck Transportation 485 Transit and Ground Passengers 487 Scenic and Sghtseeing Tran 488 Transportation Support 491 Postal Services 492 Couriers & Messengers 493 Warehousing & Storage 2 80 1,622 2,537 715 7,549 38,474 1,034 1,816 2,362 0 29 4 922 357 6,755 16,026 515 1,107 1,300 0 25 264 1,070 566 597 24,797 423 1,341 904 0.0 % -14.3% 6600.5 % 16.1 % 58.6 % -91.2% 54.7% -17.8 % 21.2% -30.4 % TOTAL SERVICES $ 6,274,592 $ 2,944,840 $ 3,053,990 Overall Services Change from Previous Year $109,151 3.7% YTD MISCELLANEOUS 18 TOTAL 18 YTD 19 YTD % Diff 000 Unknown 111-115 Agriculture, Forestry, Fishing 211-221 Mining & Utilities 999 Unclassifiable Establishments 0 1,737 693 113,390 307 203 55,060 0 214 676 60,124 0.0 % -30.4 % 233.2% 9.2 % TOTAL TRANSP & WHSING $ 56,191 $ 27,016 5 29,988 Overall Transportation Change from Previous Year 62,972 WHOLESALE TRADE 18 TOTAL 18 YTD MISCELLANEOUS TOTAL $ 115,820 $ 55,570 $ 61,014 11.0% Overall Miscellaneous Change from Previous Year $5,444 YTD 19 YTD % Diff 423 Whls Trade -Durable Goods 424 Whls Trade -Nondurable Goods 425 Wholesale Electronic Markets 1,126,051 180,401 2,719 565,535 81,539 1,337 481,138 75,352 1,708 -14.9% -7.6% 27.7% WHOLESALE TRADE TOTAL $ 1,309,170 $ 648,411 $ 558,198 Overall Wholesale Change from Previous Year (590,213) -13.9% 9.8% YTD 18 TOTAL 18 YTD 19 YTD % Diff GRAND TOTALS $19,894,510 59,214,020 59,265,684 Grand Total Change from Previous Year 551,663 0.56% Grand Total Change from Previous Year -Without New Construction 548,218 0.57% INFORMATIONAL MEMO Page 6 Schedule IV - Gambling Tax `e (d) 2019 Quarter 2018 2019 Allocated Earned Actual Actual Budget INCREASE (DECREASE) YEAR OVER YEAR BUDGET VARIANCE Amount Amount % Q1 $ 985,901 $ 999;638 $ 1,130,363 Q2 841;104 947.463 964,350 Q3 985.439 1;129,833 Q4 943242 1081454 $ 13;737 1% $ (130;725) -12% 106,359 13°ro (16,886) -2% Totals $ 3,755,686 $ 1,947,102 $ 4,306,000 $ 120,096 7% $ (147,611) -7% Gambling taxes were up $120k (7%) compared to the same period in the prior year. Effective Jan 1st the card room gambling tax rate was increased from 10% to 11 %; factoring in the rate increase on card rooms, the four casino's reported a net decline in gross receipts of -3% or ($563k) compared to gross receipts for the first half of 2018. The majority of this occurred in the first quarter (down -8.0%) while the second quarter reported a slight increase (up 2.6%) in gross receipts. When compared to the allocated YTD budget, gambling taxes were $148k (-7%) under budget. Schedule V - Admissions Tax (b' (d) 2019 Quarter 2018 2019 Allocated Earned Actual Actual Budget INCREASE (DECREASE) YEAR OVER YEAR BUDGET VARIANCE Amount % Amount Q1 $ 206.037 $ 272,521 $ 185,910 Q2 249096 251;285 224;762 Q3 209,385 188,931 Q4 277;505 250397 $ 66,484 32% $ 86,611 47% 2,190 1% 26.523 121/o Totals $ 942,023 $ 523,806 $ 850,000 $ 68,674 15% $ 113,134 28% Admission taxes remain strong with the first half of 2019 exceeding the same period of last year by almost $69k and exceeding the YTD budget by over $113k. The growth in Admission taxes can be attributed to new recreation type businesses as well as the general trend of growing taxable activities in the Services industry. INFORMATIONAL MEMO Page 7 Schedule VI - Telecommunications Utility Tax °' (d) 2019 Quarter 2018 2019 Allocated Earned Actual Actual Budget INCREASE (DECREASE) YEAR OVER YEAR BUDGET VARIANCE Amount % Amount % Q1 $ 292,954 $ 236,604 $ 353,342 Q2 279,555 228.313 337,182 Q3 266,563 321,511 Q4 280,205 337,965 $ (56,350) -19% $ (116;738) -33% (51,243) -18% (108,869) -32% Totals $ 1,119,276 $ 464,917 $ 1,350,000 $ (107,592) -19% $ (225,607) -33% Telecommunications Utility tax has been trending downward over the past few years. Tax collections for the first half of 2019 was no exception, posting nearly 20% under compared to the same period of the prior year. Other surrounding cities have been experiencing a similar decline in telecommunications taxes which indicates this trend goes beyond Tukwila. Additionally, a review of taxpayers shows a decline in reported gross sales across most taxpayers as opposed to any one specific taxpayer. Research has indicated that consumer behavior has been changing over the past few years with households opting for data -based plans and getting rid of the traditional home phone lines.