Cities' tax revenue reflects growing retail climate

By: CHRIS BAGLEY - Staff Writer | Tuesday, March 14, 2006 11:21 PM PST ∞

Revenue from sales tax has continued to rise strongly in Temecula and Murrieta, a trend that reflects population growth and higher consumer spending, according to recently released reports.

Murrieta collected $2.74 million in sales tax in October through December, an increase of 19 percent from a year earlier, according to figures from The HdL Companies, which analyzes revenue for several dozen municipalities. That tax revenue covers about 35 percent of the $7.8 million the city spends in a typical three-month period, according to budget projections for the year starting July 1.

Temecula collected $7.24 million in the fourth quarter, up 16 percent from that period in 2004, HdL states. That accounts for just over half of the city's budgeted expenses for an average three-month period this year, according to mid-year budget revisions.

The fourth-quarter receipts reflect the cities' 1 percent share of retail sales during the third-quarter ---- July through September. Cities usually receive their share of tax revenues from stores three to four months after the quarter in which the sales occur. Lake Elsinore hasn't received its quarterly report.

The growth rates in Murrieta and Temecula's tax revenues have fallen below the county as a whole, where retail sales grew about 21 percent in the third quarter from a year earlier, according to the report. Retail growth has followed population growth, with the Coachella Valley and unincorporated parts of the county generally growing faster than established cities. Temecula maintains the fourth-largest sales-tax base in the county, after Riverside, the unincorporated area and Corona.

Murrieta's growth was particularly strong, reflecting retail businesses that are beginning to catch up with the city's housing boom.

Tax revenue from third-quarter sales of home furnishings nearly doubled from a year earlier, to $190,000. Those numbers include taxes from a range of stores, including a Wickes furniture store that opened on Avenida Acacias in August. Furniture sales will likely continue to grow quickly as sales at new stores increase.

The city also reaped $187,000 in taxes on third-quarter sales of boats, motorcycles, trailers and other recreational vehicles, about 50 percent more than a year earlier, the report states.

Temecula's revenue growth came largely from a surge in vehicle sales. Dealers in Temecula rang up about $179 million in sales in the third quarter, generating $1.79 million in tax revenue for the city, 23 percent more than a year earlier.

Sales may not continue to increase at that rate, however, since discounts that domestic manufacturers prodded their affiliated dealerships to offer customers last summer have ended.

However, an ongoing expansion of the city's auto mall, already one of the largest in the county, hints that new-vehicle sales will continue to be an important revenue source.

Contact staff writer Chris Bagley at (951) 676-4315, Ext. 2615, or cbagley@californian.com.