Gilroy’s economy was still in decline this past holiday season,
but things appear to be bottoming out, city officials said in a
sales tax report released Friday.
Gilroy’s economy was still in decline this past holiday season, but things appear to be bottoming out, city officials said in a sales tax report released Friday.
City sales tax revenues for the last three months of 2009 were about $2.77 million, down 3.2 percent from $2.86 million during the fourth quarter of 2008, according to a report from the City of Gilroy. The decline was not as bad as anticipated, but city officials are not expecting a dramatic turnaround anytime soon.
“We’re low now, and that’s going to be the benchmark for awhile,” City Finance Director Christina Turner said.
The largest economic gains for the City of Gilroy included service stations and department stores, while the largest declines were in auto sales and heavy industry.
Gilroy’s 3.2 percent decline compares to an 8.6 percent drop in sales tax revenues in Morgan Hill during the same period. Most cities in Santa Clara County faced sales tax declines compared to 2008, with the exception of Cupertino, Saratoga and Los Gatos.
Despite city losses, the report indicates that the city generally is not losing sales potential sales revenue to other cities, and actually is capturing sales tax in excess of what residents typically spend. For instance, apparel stores generate more than nine times what Gilroy residents typically would spend, and the city takes in almost three times the amount of sales tax revenue that local residents would typically spend, according to city officials.
Gilroy’s downtown, excluding auto dealers and service stations in the area, was a particularly bright spot, raking in $59,764 in late 2009 compared to $49,621 during the same period in 2008.
On the other hand, auto dealers were hit particularly hard, bringing in only $171,073 in sales tax in late 2009 compared to $229,4111 in late 2008.
Continued high unemployment, consumer uncertainty and housing problems have held back growth statewide, according to the city report.
The state hopes for the economy to stabilize during 2010, yet understands that growth will come slowly, the report said.
