City of San Marcos Sales Tax Update Q22018 Third Quarter Receipts for Second Quarter Sales (April - June 2018)

San Marcos SALES TAX BY MAJOR BUSINESS GROUP In Brief $1,400,000 2nd Quarter 2017 $1,200,000 San Marcos’ receipts from April 2nd Quarter 2018 through June were 3.9% below the $1,000,000 second sales period in 2017 though the decline was the result of the State’s transition to a new software $800,000 and reporting system that caused a delay in processing thousands of $600,000 payments statewide. Sizeable local allocations remain outstanding, par- $400,000 ticularly for home furnishings, build- ing materials, service stations and $200,000 casual dining restaurants. Partial- ly offsetting these impacts, the City received an extra department store $0 catch-up payment that had been General Building County Restaurants Business Autos Fuel and Food delayed from last quarter due to the Consumer and and State and and and Service and Goods Construction Pools Hotels Industry Transportation Stations Drugs same software conversion issue. Excluding reporting aberrations, ac- tual sales were up 3.0%. Progress was led by higher re- Top 25 Producers ceipts at local service stations. The In Alphabetical Order REVENUE COMPARISON price of gas has been driven high- ABC Supply Co Hughes Water & Four Quarters – Fiscal Year To Date (Q3 to Q2) Sewer er over the past year by simmering Albertsons Hunter Industries global political tension and robust Ashley Furniture 2016-17 2017-18 economic growth that has lifted de- Homestore Jeromes Furniture mand. Best Buy Kohls Point-of-Sale $14,377,888 $14,692,328 The City also received a 12% larg- Biggs Harley KRC Rock Davidson County Pool er allocation from the countywide Landsberg Orora 2,217,780 2,261,825 use tax pool. The pool is divided Costco Marshalls State Pool 8,054 8,444 proportionately among local agen- Economy Restaurant Equipment Modern Builders cies based on point of sales re- Supply Emser Tile Gross Receipts $16,603,722 $16,962,597 ceipts and San Marcos received a Nordstrom Rack Frys Electronics larger share of the pool this quarter Roofing Wholesale with results that outperformed the Holland Motor San Marcos AM PM County average. Homes Home Depot San Marcos Mobil Net of aberrations, taxable sales Hub Construction Walmart for all of San Diego County grew Specialities 0.9% over the comparable time pe- riod; the Southern California region Published by HdL Companies in Fall 2018 was up 1.0%. www.hdlcompanies.com | 888.861.0220 ing prices by absorbing the costs of the of the by costs absorbing the prices ing to avoid rais have managed ufacturers man 5% of new Many the rates. ahead customs inventories spring through rush to attempting are and holiday season inventory for their the imported already of 2018-19 have most major retailers as remainder the through minimal be will sales on and prices impact the that lieve be Despite analysts debates, current the 2018. of to 25% quarter, rising third end by the of 10% for end the of the announced duties additional with strategy trade government’s federal international the element key a arebecoming of Tariffs Tax Sales and Tariff Policies state. the of rest outperformed the Valley areas Joaquin San and Sacramento the and Bay area Francisco Regionally, San the amajorprojects being factor. energy new in declines with quarters previous lower than slightly were purchases Business-industrial group. goods consumer general the within gainers stores were primary apparel the themed andcentersvalue fulfillment Online gains. to show substantial continued from autoreceipts leases although anticipated, previously as leveled off Autosecond quarter. sales the during growth of statewide drivers primary to the have been appear ping shop- online and jet fuel materials, construction and building of Sales 2017. second quarter than higher 1.6% be revenues will tax use and sales local statewide receipts, quarter actual adjusted to reflect data the and properly processed are returns all once that estimates HdL payments, partial of amounts full the approximating and After reviewing unprocessed returns quarter. next generated be will it revenues estimates that tax by advancing shortages resulting the State’s by the skewed attempt to offset further were The results system. CDFTA’s software reporting tax new due to implementationago with issues 10.1% one year quarter same from the dropped sales June through April from receipts Government cash Local Overall California NOTES 2018 Q2 - - - opportunities. expansion and equipment supplies, in investment capital and job base panies’ com affected the both atively impact neg will exports California on tariffs $5.6announced retaliatory in billion the and dollar stronger the that worry Opponents consumers. on increases relatedprice tariff impact theof offset will of U.S. the dollar strength rising the that argue Proponents tariffs of rising income. discretionary portion of for asignificant compete costs care health education and housing, rising where environment an in particularly number ofthe purchases, reduce potentially also they purchases, from individual tax generate more sales prices higher revenues. Although tax use and on sales impact the and policies trade government its refines federal the 2019-20ing how be revenues will tax project analysts concern for Thekey projects. on long range increases cost to cover potential contracts in clauses escalation to require beginning tors are contrac and a competitive disadvantage at placed be may power prices to in lock without the retailers side,down small the On components. and machinery onmetals, roundtariffs of first initial S Trailers/RVs Specialty Stores Service Stations Quick-Service Restaurants Plumbing/Electrical Supplies Discount DeptStores Department Stores Light Industrial/Printers Contractors Home Furnishings Business Type Building Materials Casual Dining Grocery Stores Electronics/Appliance Stores Gross Receipts County &StatePool Allocation Total AllAccounts Boats/Motorcycles AN *In thousandsofdollars M ARCOS City of San Marcos ofCity San T OP 15

B USINESS Q2 '18* 4,056.6 3,485.8 L — — CONFIDENTIAL — — CONFIDENTIAL - - - - 157.4 187.9 168.3 448.2 146.2 211.4 169.8 306.3 188.8 213.4 128.1 570.8 103.1 84.9 81.1 74.3 San Marcos R San MarcosThisQuarter S $1,000 $2,000 $3,000 $4,000 Cons.Goods 30% EVENUE San Marcos ALES Food/Drug $0 Change -20.6% -13.1% -21.2% -14.0% -32.7% -14.3% 19.5% 18.6% 46.6% 12.2% 12.9% -1.3% -0.5% -3.9% -6.2% 4.7% 2.2% 5.7% T Q2 Sales TaxSales 15 5% YPES P ER Fuel 5% B Y Change County -41.9% -31.9% -12.0% -31.3% -26.5% -20.2% -12.3% -10.3% -25.3% -10.6% C 23.6% -5.2% -9.6% -3.1% -2.1% 3.9% 1.5% 4.9% Q2 B 16 County Building Autos/Trans. APITA 15% USINESS 9% Update HdL State Change -26.4% -13.5% -26.0% -12.6% -10.7% -21.7% -12.2% -10.1% -23.2% -12.4% 12.7% -6.7% -4.6% -5.8% -6.7% -5.1% -7.0% 5.5% Q2 17 G Bus./Ind. California 10% ROUP Restaurants 14% Pools 11% Q2 18