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Local News

City of Santa Barbara Sees a Decline in Sales and Bed Tax Revenues

The city of Santa Barbara finished the second quarter of this fiscal year with sales-tax revenues dipping, and closed out the month of February with decreasing bed tax revenues.

Through Dec. 31, the city had generated about $5.7 million in sales tax, a 1.3 percent decrease over the same quarter last year, according to the city’s treasurer’s office report.

The sales tax budget for this year, estimated at $22.4 million, is the second largest source of Santa Barbara’s General Fund revenue.

“It’s reflective of either fewer people coming to visit or fewer people spending money who are visiting or living in Santa Barbara,” said City Finance Director Bob Samario. “We don’t have any idea why — revenues from sales taxes depend on how many people come to visit and people who shop in Santa Barbara.”

Since sales tax revenues are received quarterly from the state and one quarter in arrears, the city receives the second quarter results for each fiscal year in March.

March also marks the second sales tax payment for the 2017 fiscal year.

With two-quarters received, sales tax revenue are approximately $11.2 million,  according to a news release.

The finalized sales tax results for the March quarter will be available in June.

The report released by budget officers this week also revealed Santa Barbara collected approximately $1.1 million in Transient Occupancy Taxes, also known as bed taxes, for the month of February, representing a 9.5-percent decline compared to February 2016.

“Bed tax is a function of fewer people saying at the hotels,” Samario said.

Above-average rainfall, including a large storm before a three-day weekend, was noted as a contribution to this large decline, according to a news release. 

The city has gathered approximately $12.7 million in TOT revenues for the first eight months of this fiscal year. 

The TOT budget for the 2017 fiscal year— which runs from July 1 through June 30 — is $19.8 million.

With the decreases, Samario said, it could “slightly” affect the city’s budget.

City staff keeps a close look at the trends and analyzes them to make a budget recommendation, he said.

“The trends have been hit-and-miss — mostly miss in the recent last year,” Samario said. “If we see negative trends then we have to adjust our revenues accordingly, which means we can’t count on those revenues to support services.”

Samario said the most recent recession resulted in program cuts for the city.

“We had a major decline in revenues for over a year, and had to make substantial reductions to our programs and services — that’s not the case,” Samario said. “These are not major impacts.”

Santa Barbara releases revenue information on its monthly Transient Occupancy Tax and quarterly sales tax collections.

Noozhawk staff writer Brooke Holland can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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