Officials say city’s hotels are slowly bouncing back
If it wasn’t for people buying cars, the city would be in even worse financial shape than it is now.
Sales at the city’s automobile dealerships drove Santa Monica’s economy in the first quarter of this year. The dealerships, which are mostly located along Santa Monica Boulevard, sold about $122.6 million in automobiles generating more than 20 percent of the total sales tax revenue collected by the city.
“It’s definitely an important sector of our sales tax revenue,” said city treasurer Ralph Bursey.
While it’s typical for the dealerships to lead local businesses in generating sales tax revenue, aggressive low-interest financing deals drove automobile sales up nearly 13 percent locally, compared to the same fiscal quarter last year.
The number is surprising since almost every other sector of Santa Monica’s economy has shrunk when the same comparison is made, officials said.
“The zero percent financing helped bolster the sales taxes for automobiles,” Bursey said. “Obviously that’s not going to continue much longer.” quarterly to the state, which divvies the amount up between itself, the county and the municipality. Of the state’s 8.25 percent sales tax, Santa Monica receives 1 percent.
“The zero percent financing helped bolster the sales taxes for automobiles. Obviously that’s not going to continue much longer.” — — RALPH BURSEY City Treasurer
From January to March 2002, local businesses generated $5.6 million in sales tax revenue for the city — an 8 percent decline compared to the same quarter last year. Officials are estimating by the middle of 2003, businesses will have paid the city $25.7 million in sales tax revenue, a 4 percent increase from last year.
Bursey said he can’t predict whether the city is on target of reaching its sales tax revenue goal for another few months.
“We have to wait until we get the final numbers in for the quarter before we can actually predict how close we are going to be at reaching our projected figure,” Bursey said.
Even though restaurant sales dropped 2.6 percent citywide in the first quarter of this year, the industry paid $813,000 in sales taxes to the city. Sales at department stores, which are the third highest sales tax contributor to the city, dropped nearly 7 percent, generating $623,000. “If you look at the make-up of those, tourism plays a large factor in how well they do,” Bursey said. “Those numbers would definitely be correlated by... the city’s drop-off in tourism.”
Officials announced this week that Santa Monica has lost 5,000 jobs, mostly in tech-related sectors. However, the average salary of a worker in Santa Monica has increased 5 percent from last year to $50,857, though final figures will not be received from the state’s Labor Market Information Division until September.
Last year, the city had to tighten its belt to absorb an $8 million shortfall in sales tax revenue. To balance its budget for this year, officials had to put $23 million worth of capital improvements on hold. And city officials warn that future budgets will have to be drastically reduced to take into account the drop-off in sales taxes.
A projected 11 percent decline in tourism has been blamed for decreased sales at downtown shops and restaurants, as well as in the city’s hotel industry. The city has undertaken a $200,000 international media campaign in the hopes of bolstering tourism.
Bursey said the city would not have figures on the amount of taxes collected on hotel rooms for another month. Last year the city had predicted it would make $21 million on hotel taxes but after the terrorist attacks on Sept. 11 the city had to lower that figure to $16.1 million.
This year officials are predicting the city’s hotels will rebound by $2 million and rake in more than $18 million in hotel taxes.
“We are seeing that (rebound) occur,” Bursey said. “We have seen it start to come back, though I don’t have hard numbers to share yet.”
Originally published in the Santa Monica Daily Press print edition on August 7, 2002. Read the original PDF.