Though the City of Santa Monica has a vibrant, diverse economy, it is not immune to the economic downturn plaguing the nation. Tax revenues and real estate are adversely impacted by the crisis, thus the Mirror decided to gather some data to let readers know some of the facts and hard figures. David Carr, principal budget analyst-investments for the City of Santa Monica, said revenues from sales tax and the transient occupancy tax (sometimes called the hotel bed tax) represent the two biggest tax revenue dips in the current economy. He also said his data is from the fourth quarter of 2008, and that the lag in data could mean there’s an even worse story about to be revealed when new data is released in the coming months. Below are some numbers from the fourth quarter of 2008. Carr said his figures are adjusted, which means they are the truest representation of the facts.Sales tax revenues were down 16% in Santa Monica for the fourth quarter of 2008, as compared to the fourth quarter of 2007. Between the fourth quarter of 2006 and the fourth quarter of 2007, sales tax revenues only dipped by 2.7% in Santa Monica. Comparing those figures to other cities, sales tax revenues in Beverly Hills dropped 21.7% in Beverly Hills from fourth quarter of 2007 to the forth quarter of 2008, and increased by 2.7 % from the fourth quarter of 2006 to the fourth quarter of 2007. In Culver City, sales tax revenues dropped by 8.7% from the fourth quarter of 2007 to the fourth quarter of 2008, and increased by 0.3% between the fourth quarter of 2006 and the same period in 2007. West Hollywood sales tax revenues dropped 9% from the fourth quarter of 2007 to the fourth quarter of 2008, and dropped 1.2% from the fourth quarter of 2006 to the same period in 2007, according to Carr. “About twenty percent of Santa Monica’s sales tax revenue comes from new vehicle sales, which are down by 21.9 percent,” Carr said. The second highest source of sales tax revenue comes from consumer goods, such as clothing, food and other essentials. Those sales tax revenues are down 20.7%. “The closure of Santa Monica Place has also had an impact, but we’re not sure exactly how much,” Carr added. “We do know that the revenues for Santa Monica place were down by fifty percent last year when compared to prior years.”He added the transient occupancy tax, otherwise known as the hotel bed tax, another big source of tax revenue for the City of Santa Monica, has dropped by 30% in the last three months. On the topic of property sales, Carr said the number of property transfers this fiscal year (July 2008-February 2009) is down 19.9% from the same period one year ago.The number of property transfers from July 2007-Feb 2008 was down 18.7% from the July 2006-Feb 2007 period. “What this shows is that this decline in sales has been happening for several years,” Carr stated. “It is projected that this will result in a very small gain, if any, in property tax revenues in fiscal year 2009-2010 after several years of very strong growth.Regarding to business license taxes, Carr explained that next fiscal year’s (2009-2010) business license tax revenue will be based on the businesses’ gross receipts for 2008. “Although there is no available data yet, except for declining revenue for retail businesses based on sales tax revenues, it is likely that the recession will affect many businesses’ gross receipts. Based on this, it is projected that business license tax revenues will show little or no growth over the next one to two fiscal years.”On the topic of home foreclosures Carr said that although the number of properties entering the foreclosure process is increasing, it is still a relatively small percentage of the properties in Santa Monica. Andy Agle, the city’s director of housing and economic development, said that the well educated population and diverse job market in Santa Monica make the city a prime candidate for coming out of the recession faster than many other cities. “We are hopeful that we will be one of the first cities in the area to come out of the downturn and that the real estate market will rebound here before it does in many other cities,” Agle said. According to real estate tracking company, DataQuick, the median price of a home in Santa Monica in February was $760,000, compared to the median price last year during the same month, which was $787,000. They reported that twenty houses were sold in Santa Monica in February.
The State of Tax Revenues and Real Estate:
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