Slow retail sales cost the city nearly $400,000 last fiscal
year. Between July 1, 2007, and June 30, 2008, the city pulled in
$14,153,347 in sales tax, down 2.7 percent from the year
before.
Slow retail sales cost the city nearly $400,000 last fiscal year.
Gilroy pulled in $14,153,347 in sales tax between July 1, 2007, and June 30, 2008, down from $14,540,541 the year before. That represents a 2.7 percent shortfall. Heading into the last fiscal year, the city actually projected a 4.5 percent gain in sales tax revenues totaling $15.2 million. The actual receipts fell 7.4 percent from that projection.
The city’s financial team recognized the downturn after December sales dropped more than 15 percent compared to December 2007 and signs of a slower economy emerged nationwide. And if the first half of 2008 is any indication, cash registers will continue to ring less and less.
Sales tax revenue from January to June of this year has fallen by 4.4 percent, or $455,000, compared to the same six month period in 2007. Despite the downward trend, city officials expect this fiscal year to rebound before dropping a total of 1 percent. After that, officials project an annual growth rate of 3.7 percent through 2013.
Gilroy’s share of the county’s 8.25 percent sales tax is 1 percent, which means $1.4 billion worth of commerce took place in Gilroy last fiscal year. Sales tax accounts for about 43 percent of the city’s general fund revenue, which is the source of the city’s discretionary money, including salaries. Last year’s overall sales tax revenue decline represents nearly a 1 percent hit to the general fund, which is already running a $3.9 million deficit.
Amid the slowdown throughout the first half of the year, March saw the only increase. It amounted to a 1.8 percent jump, or $16,382, from March 2007. This brief relief turned south again, though, as shoppers around the country coped with fluctuating gasoline and food prices and tighter credit in general. Local spenders cited these factors but generally said they were curbing spending only slightly.
Before the slowdown really began, Gilroy experienced modest economic growth during the 2007 calendar year. Sales tax revenue for that period rose 3.9 percent over 2006. The city’s sales tax base has risen by almost 89 percent since 1998, with a whopping 18 percent gain between 2004 and 2005, according to city figures. Sales tax revenue for fiscal year 2006-2007 ($14,540,541) fell just shy of the city’s budgeted prediction: $14,764,188.
