2009 Q1 Sales Tax Update
www.hdlcompanies.com | 888.861.0220In BriefSales Tax UpdateReceipts for Rosemead’s January through March sales were 1.6% lower than the same quarter one year ago. Actual sales activity
was down 7.8% when reporting aberrations were factored out.The city experienced a decline in sales from used auto dealers, restaurants with liquor, and some categories of the Building
& Construction and Business & Industry sectors. A previous business closeout exaggerated the sales decline from home furnishings. The first quarter drop in fuel prices reduced service
station receipts.The losses were partially offset by a onetime accounting adjustment that increased the results from light industrial/printers. Receipts from a category of the General
Consumer Goods sector were inflated by a onetime reporting aberration. Additionally, the city experienced a strong sales quarter for auto supply stores and grocery stores with beer/wine.Adjusted
for aberrations, taxable sales for all of Los Angeles County declined 16.4% over the comparable time period, while the Southern California region as a whole was down 16.8%.Top 25 Producers7
Eleven888 SeafoodAllco MaterialsAuto Used CarAuto ZoneBarr LumberBed Bath & BeyondCH AutoChevronCircle KCVS PharmacyDunn Edwards CorporationEast Gourmet Seafood RestaurantEastern Auto
SalesLQN Auto SalesMacysMcDonaldsMcDonalds Office Depot Rite AidRosemead MobilRosemead Valley MartSea Harbour SeafoodTargetWal Mart SupercenterSecond Quarter Receipts for First Quarter
Sales (Jan-Mar 2009)Q12009City of RosemeadRosemeadPublished by The HdL Companies in Summer 2009$0$50,000$100,000$150,000$200,000$250,000$300,000$350,000$400,000SALES TAX BY MAJOR BUSINESS
GROUP1st Quarter 20081st Quarter 2009BuildingandConstructionBusinessandIndustryFoodandDrugsFuel andServiceStationsAutosandTransportationRestaurantsandHotelsGeneralConsumerGoods$(1,248,606)$(925,879)$
4,994,423 $3,703,515 1,586 1,812 498,167 364,578 $4,494,670 $3,337,125 2008-092007-08Point-of-SaleCounty PoolState PoolGross ReceiptsLess Triple Flip**Reimbursed from county compensation
fundREVENUE COMPARISONFour Quarters – Fiscal Year To DateIn Alphabetical Order
NOTESSales Tax UpdateRevenue by Business GroupBell This QuarterQ1 2009Sales Per CapitaBell Top 15 Business CategoriesCity of RosemeadQ1 '09RosemeadROSEMEAD TOP 15 BUSINESS TYPESBusiness
TypeChangeChangeChangeCountyHdL State1.7%-3.2%-2.0%$234,205 Discount Dept Stores— CONFIDENTIAL —4.3%-2.7%-4.1% 97,992 Restaurants No Alcoholna -21.6%-19.1% 77,915 Department Stores—
CONFIDENTIAL —-52.0%-35.3%-35.4% 60,976 Service Stations-13.5%-25.9%-26.3% 49,328 Used Automotive Dealers3.8%-9.9%-9.5% 28,399 Restaurants Beer And Wine-11.0%-2.2%-5.4% 24,869 Restaurants
Liquor-6.6%-10.4%-8.0% 21,151 Auto Repair Shops-18.0%-7.9%-10.2% 18,076 Specialty Stores-2.9%-4.5%-2.1% 17,555 Drug Stores1.2%-6.6%-5.1% 17,410 Electronics/Appliance Stores-47.9%-21.1%-21.9%
15,485 Home Furnishings5.0%-6.4%-6.9% 14,294 Automotive Supply Stores89.8%-24.8%-10.5% 12,810 Light Industrial/Printers5.5%-17.7%-8.9% 11,359 Grocery Stores Beer/Wine-17.6%-17.2%-3.2%14.5%-1.6%$796,7
55 97,055 $893,810 Total All AccountsCounty & State Pool AllocationGross Receipts$0$1,000$2,000$3,000$4,000SALES PER CAPITARosemeadQ106Q109Q107Q108CountyCalifornia47%Cons.Goods19%Restaurants12%Autos/
Trans.8%Fuel5%Food/Drug9%OthersREVENUE BY BUSINESS GROUPRosemead This QuarterCalifornia OverallStatewide sales tax revenues continued to trend downward for the seventh consecutive quarter
with June’s allocations for sales occurring in the January through March period 16.5% lower than the same period one year ago.The contraction was experienced in all regions with previous
holdouts such as the Silicon Valley and some pockets of high end tourism now exhibiting the same percentage decreases as the rest of California. The drop in tax receipts resulted as
much from significant price reductions as it did from reduced consumer spending and business investment. Excluding accounting aberrations, the most severe impact was from a 38.3% decline
in fuel and service station receipts reflecting the dramatic retreat from last year’s record fuel prices and lower consumption.The allocations from new car sales dropped another 28.3%
from the first quarter of 2008 while revenues from traditional department stores, furniture stores and building materials all exhibited reductions of 20% or more. Sales and use tax revenues
are pro-jected to continue to decline through the remainder of 2009 although subsequent reductions should become increasingly moderate. The beginning of a recovery for most regions and
categories is not anticipated until mid-2010.Additional Use Tax OptionsThe state’s budget deliberations include provisions for more aggressive collection of unpaid use tax. Sellers without
physical nexus in the state are not required to collect sales tax from their California customers. In these cases the buyer is liable for paying a corresponding “use tax.” Although the
state does an effective job of auditing larger companies, cost and lack of data make monitoring of taxes paid on purchases by individuals and small companies impractical.Two actions
are being considered to partially deal with this problem. The first is to require non-sellers to register with the Board of Equalization and file annual returns on unpaid use tax. As
professional tax preparers are obligated to properly report purchases, the state estimates that the proposal would generate an additional $57 million per year by 2009-2010. The second
action involves a practice enacted by the State of New York that expands the definition of “nexus” to include companies that pay commissions on sales referrals from New York based web
sites or affiliates that advertise their products. It is estimated that a similar definition in California could generate up to $110 million per year. Both actions would also increase
city and county collections.Amazon.com recently lost a court challenge to the New York law and has threatened to drop its affiliates to avoid losing the competitive advantage of not
having to collect and pay sales tax. California’s governor has also indicated his opposition.