1st quarter sales taxes collected down in South Lake Tahoe, El Dorado County and California

SOUTH LAKE TAHOE, Calif. - South Lake Tahoe’s receipts from January through March 2023 were 2.1 percent below the first sales period in 2022. Excluding reporting aberrations, actual sales were down 2.6 percent, according to the quarterly report released this week from the City of South Lake Tahoe Director of Finance, Olga Tikhomirova.

Sales weakened in multiple sectors due to pricing pressures on essentials such as food and energy as federal policymakers continued their actions to cool consumer demand. Factor in the record snow and severe weather during the quarter affecting access to the area with one local business that closed due to the storm damage.

Restaurant-hotel receipts diminished across casual dining and quick service

outlets. Prices have remained high which may have influenced menu choices for patrons who dined out. Lower prices at the pump, coupled with softer demand led to a drop in fuel-service station receipts.

After record pricing last year for lumber, prices plunged and with weather delays and fewer do-it-yourself projects, building-construction sales couldn’t match recent double-digit gains, the report states.

Measures S & Q posted similar declines with fewer general consumer goods
and building materials purchases, along with fewer patrons at local dining
establishments.

Net of aberrations, taxable sales for the Sacramento region was down 3.6 percent over the comparable time period.

The top 25 sales tax producers for Q1 (in alphabetical order) in South Lake Tahoe: Aisle 1, Azul Latin Kitchen, Base Camp Pizza Co, California Burger, Cannablue, CVS Pharmacy, Diy Home Center, Embarc Tahoe, Fire Ice Grill & Bar, Heavenly Sports, Jim Bagan Toyota, KB Chevron, McDonald’s, McP’s Pub Tahoe, Powder House, Raley’s, Riva Grill on the Lake, Ross, Safeway, Safeway Fuel, Sports Ltd, Stateline Brewery & Restaurant, TJ Maxx, Up Shirt Creek, and Whole Foods Market.

For the state, California’s local one cent sales and use tax receipts for sales during the months of January through March were 1.1 percent lower than the same quarter one year ago after adjusting for accounting anomalies.

The first quarter of the calendar year experienced heavy rainfall and a slight pullback by consumers during this postholiday period. The building and construction sector was most impacted by wet weather conditions, especially contractors and paint/glass vendors. Furthermore, when coupled with year-over-year (YOY) lumber price declines, the sector saw a 9.7 percent statewide drop.

YOY declines in fuel prices at the pump reduced receipts from gas stations and petroleum providers. Even with OPEC’s recent production cuts, the global cost of crude oil has remained steady setting up for moderate gas prices for travelers and commuters in the coming summer months.

Retailers also selling fuel experienced a similar impact and when combined with weak results from department stores, overall general consumer goods’ returns slightly declined.

After multiple years of high demand for vehicles (especially high-end luxury
and electronic/hybrid brands), along with inflation driving car prices higher, customer demand has softened with revenue slumping 1.3%. The return of available inventory later this calendar year may sustain downward pressure on activity, potentially giving buyers more leverage to negotiate lower prices. Use taxes remitted via the countywide pools decreased 1.1%, marking the second consecutive quarter of decline.

Cooling consumer confidence, expansion of more in-state fulfillment centers and retailers using existing locations to deliver goods tied to online orders continue to shift taxes away from the pools. While the offsetting effect was these revenues being allocated directly to jurisdictions where
the goods were sourced, only a limited number of agencies benefited.

Spending at local restaurants and hotels continues to be robust. Patrons were unaffected by increased menu prices and wait times and maintained their willingness to dine out. In addition, investments in warehouse/farm/construction equipment was steady.

For the remainder of 2023 sales taxes may decrease modestly, then begin a nominal recovery in early 2024. Volatile economic indicators such as the Federal Funds rate, unemployment levels, and discretionary spending will influence outcomes. While it appears the Federal Reserve’s actions to
fight inflation is taking effect, any lasting downward pressure on consumer pricing could also hinder short term growth.