The Golden State showed moderate gains in sales tax receipts in the fourth quarter of 2022, reporting an overall 4.7% increase in sales and use tax revenue from October through December, compared to the same period in 2021. The returns reflect holiday season shopping activity which lifted revenue to local agencies across the state.

“Overall, general consumer goods grew by a meager 1.8% in large part due to merchants selling gas at prices which remained elevated over the last year,” stated Andy Nickerson, President/CEO of HdL Companies, the leading provider of revenue enhancement technology and consulting services for local governments. “Otherwise, many brick and mortar retailers experienced mixed results as the phenomenal prior year activity made for an extremely difficult comparison.”

High gas prices continued to burden commuters and seasonal travelers throughout the state, lifting fuel-service stations’ sales tax receipts 10% higher than a year ago. Gas prices of more than $5 per gallon did not detract consumers from spending at local restaurants and hotels.

“Restaurant and hotels experienced an 8.7% increase, enhanced by higher menu prices and return-to-office workplaces,” noted Nickerson. “Although car inventory shortages had a negative impact on unit sales and leasing activity throughout 2022, year-end sales by new car dealers, notably high-end luxury and electric/hybrid brands, helped to boost the auto-transportation sector by 5.6%.”

The building and construction sector was up 5.4%. Contractors accounted for most of the growth in the sector, which continues to experience steady housing demand and pent-up construction projects delayed by supply chain interruptions. With rising interest rates tempering sales activity, property owners maintained home improvement spending.

Overall, calendar year 2022 exhibited at 9.5% surge in tax receipts compared to 2021. Inflation was a key factor and drove up prices on everything from daily purchases to vehicles. Another key factor was all-time peaks in global crude oil prices, which caused fuel prices to skyrocket.

“Heading into 2023, HdL sees modest changes coming from California’s taxable sales due to additional interest rate hikes and consumer sentiment waning about the economy,” concluded Nickerson.

View a complete table of sector and regional data here. Each quarter, HdL Companies reports on California’s sales tax receipts and impacts on local jurisdictions.

About HdL Companies

HdL Companies is dedicated to supporting local governments across the U.S. with revenue enhancement, technology and consulting services that enable cities, counties and special districts to better serve their constituents. Founded in 1983, HdL Companies’ comprehensive approach to revenue management is trusted by over 700 local governments. The company has successfully recovered over $3 billion in revenue for client agencies. For more information, visit hdlcompanies.com.

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