Pacifica's Sales Tax Report Shows Tourism as Foundation of Local Economy

What does the City of Pacifica's sales tax bring to the local economy? A recent report shows some — but not much — economic gain for Pacifica mostly from establishments frequented by out-of-town visitors.

Third quarter receipts for Pacifica’s second quarter sales (April through June 2013) were 6.2 percent higher than the same quarter one year ago, according to the report published by HdL Companies, which interprets data and performs retail analysis to find revenue from sales and use tax audit.

Pacifica's top three business types, which demonstrated significant gains in tax revenue, include fuel and service stations at No. 1, restaurants coming in at second and grocery and drug stores selling liquor in at third, indicating that Pacifica is a travel destination for Bay Area residents and tourists.

“Our ongoing thought of having tourism as the foundation for the visitor-based economy proves to be sound,” said Pacifica City Councilmember Mike O’Neill.

Seven out of 25 top generators of sales tax revenue are restaurants (in alphabetical order): Denny’s, McDonalds, Moonraker, Nick’s Restaurant, Puerto 27, Surf Spot and Taco Bell.

“The importance of this aspect demonstrates how critical the approval of the Holiday Express in Rockaway is for generation of tax for the City. My estimate for the Transit Occupancy Tax (TOT) is over $200,000 a year. The City of Pacifica has approved the project but an appeal to the Coastal Commission puts this source of income in peril to the City.”

While gas stations are No. 1 on the list, bringing in 32 percent of the sales tax revenue, this source of income may decrease due to a potential drop in gas prices, although despite recent lower fuel prices, the service station group showed gains this quarter. 

There was also a gain in consumer goods this quarter with Ross, Dollar Tree and Linda Mar Ace Home Center being the top three stores for generating the highest sales tax revenue.

In the report, consumer goods account for 15 percent of the tax revenue for Pacifica; restaurants are at 23 percent.

Still, the City of Pacifica continues to be in recovery mode when it comes to the local economy and the sales tax growth may be more modest in the fiscal years to come, according to HdL’s report.

This in turn doesn’t bode well for the city with the decrease in Educational Revenue Augmentation Funds (ERAF), the allocation of local property tax revenues from the local government which have been used by the State to help school and community college districts meet minimum funding requirements.

“The negative side is the continued and ongoing drop in the category of ERAF Funds,” said O’Neill, “and the City/County share totals approximately $140,000 this quarter with an annual loss of over $500,000 on annual basis."