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  Sales Cycles
Dave Druker | 10th Street

 

Del Mar’s revenue is defined by three major sources – property tax, sales tax and hotel transit occupancy tax(TOT). Of the three, property tax has consistently provided more income over the past decade than either sales tax or TOT. Sales tax and TOT fluctuate with the economy. During boom times sales tax revenue increases and falls during recessions. Del Mar is not immune to the economic cycle.

Del Mar’s share of the sales tax is only about one percent, received on a quarterly basis from the state about two quarters after it is collected.

In 2004 Del Mar received $1.308 million. In 2005 $1.435 million up 8.87% ; 2006 $1.458 up 1.55%. Then we had three years of decreases: 2007 down 2.99% to $1.416 million; 2008 at the depth of the recession – 2008 down 12.64% to $1.257 million; 2009 down 10.19% to a low of $1.140 million. Yet, 2010 the sales tax figures for only the first three quarters have increased 10.33%.

Approximately 38% of the sales tax is generated from the fairgrounds. By dividing the rest of the city into four quadrants defined by 15th Street and Camino Del Mar, the Plaza generates about 23%, the area west and north generates about 20%, west Camino Del Mar, 13% and east Camino Del Mar about 6%. These percentages do not fluctuate much between quarters or between years. In terms of quarters, the third quarter – during the fair and race track months at least one third of the sales tax revenue is collected. This is followed by the second quarter.

In terms of sources of sales tax, restaurants lead the way. Much of the sales tax from the fairground is from food and beverage sales. The other quadrants are also dominated by restaurants.

While sales tax is an important source of income, it is not as reliable as property tax. Many cities have mistakenly believed that zoning to increase sales tax will provide a better stream of income. This past recession has proven that sales tax is not a dependable source of income.

 

 
 

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