BREA, Calif.--(BUSINESS WIRE)--The Golden State showed resilience reflected in California’s local one-cent sales and use tax receipts for the first quarter of 2024. Covering January through March, data came in just 0.2% lower compared to the same period last year, after accounting for anomalies. Despite the first quarter traditionally being the lowest sales tax generating period, this year’s returns were closely aligned with the previous year’s figures.
HdL Companies CEO Andy Nickerson commented, "While the slight dip in tax receipts reflects some ongoing economic challenges, the overall stability in returns is a positive sign for California’s economic resilience. We’re seeing a promising trend that suggests a solid foundation for future growth."
One sector that continued to show declines was autos-transportation, which fell by 7.5% due to high interest rates increasing long-term financing costs and a significant spike in insurance rates, hurting prospective buyers’ budgets. Fuel and service stations also experienced a drop compared to last year. However, with Californians preparing for summer travel, slightly elevated gas prices are expected to transition this sector to positive results by 2025.
During the post-holiday shopping period, general consumer goods saw a modest rebound with a 0.5% increase. Although retailers selling gas were impacted by fuel prices, this did not prevent family apparel and department stores from boosting returns.
Restaurant activity contributed a steady growth of 2.1%. Fine dining establishments, however, remain hindered as more affordable menu options are preferred. Some eateries have made operational changes while implementing AB 1228, though it’s too early to determine the bill’s impact on receipts.
Business-industry sectors experienced significant gains, with investments in office supplies, furniture, and energy projects driving a 3.6% increase this quarter. Strong fulfillment center direct payments highlighted sustained logistical expansion. Improved returns via the countywide use tax pools, reflecting e-commerce preferences, led to a 1.6% improvement in overall pool allocations.
Statewide, 2024 begins on a more positive note compared to the trends seen in 2023. Nickerson added, "These buoyed first-quarter results may signify a stabilization, easing tax revenue concerns as we look forward to the next growth cycle. The Federal Reserve's stance on the Fed Funds Rate will be a crucial factor in determining whether we face economic stagnation or a boost in consumer spending. Additionally, tourism and local travel during the summer period could further enhance confidence in our economic outlook."
View a complete table of sector and regional data. Each quarter, HdL Companies reports on California’s sales tax receipts and their impacts on local jurisdictions.
About HdL Companies
HdL Companies is dedicated to supporting local governments across the U.S. with revenue enhancement, technology and consulting services that enable cities, counties and special districts to better serve their constituents. Founded in 1983, HdL Companies’ comprehensive approach to revenue management is trusted by more than 750 local governments across the U.S. The company successfully recovered more than $3 billion in revenue for client agencies. For more information, visit hdlcompanies.com.
