HollisterFreelance.com | Sales down 15 percent in retail-heavy Gilroy

Sales down 15 percent in retail-heavy Gilroy

Jan 8, 2009
By Chris Bone





		A family loads groceries at Costco in Gilroy in this 2007 file photo.
		Photo by: Free Lance file photo

GILROY

Sales tax revenue continued its yearlong drag last month, coming up 15 percent short compared to December last year and nearly 30 percent shy of December 2006, when a credit crunch seemed impossible and tax receipts for the month totaled more than $1.1 million.

Last month, the city took in slightly less than $800,000, and since September, Gilroy has accrued $3.3 million in sales tax receipts compared to $3.9 million for the same period last year. That represents a shortfall of about 16 percent.

More detailed figures, including how the Gilroy Premium Outlets compare to the auto dealers, will not be available until the end of January, according to Revenue Officer Irma Navarro. Her last report from October, though, showed that sales tax from the outlets actually grew by $58,000, or 2.5 percent, and higher gas prices meant service stations earned the city nearly $286,000 more in sales tax compared to the year before, a 30 percent gain.

But stretched credit and a standstill in development have contributed to the precipitous decline in oil prices since the summer and fall months, and officials expect the auto dealers to continue taking heavy hits while big box retailers on the east side such as Wal-Mart, Costco and Lowe's also come up short.

Finance Director Christine Turner and City Administrator Tom Haglund have repeatedly warned the city council as much since the body adopted the budget in June with a $13.9 million projection for sales tax revenue, which equals about a third of the city's general fund. Turner knocked that number down to $13.6 in October after reviewing audited numbers and she has told the council additional tweaks could come next month after she sits down with Gilroy's financial services company, MBIA, to analyze and formalize numbers from July, August and September.

"I feel like we'll be in a much better place to give an update after that meeting and then coordinate a midyear review with MBIA to present to the council, probably by February," Turner said. "Right now we don't have much of an update."

Still, the latest numbers - based on advances the state gives Gilroy each month along with the quarterly adjustments in September and December that reflect actual sales - do not bode well for the general fund, which pays employees' salaries.

By laying off 46 full-time and 12 part-time employees, finance officials expect this fiscal year's deficit to total $2.3 million, down from about $6 million two months ago. They predict Gilroy will end up about $900,000 in the black next year largely due to personnel cuts, but that also assumes Gilroy's share of the housing crisis will taper off and the state does not withhold millions more this spring to patch its own budget.

In the larger scheme of things, though, Gilroy's sales tax base has risen by almost 89 percent since 1998, with a staggering 18 percent gain between 2004 and 2005, according to city figures.

Chris Bone
Chris Bone covers Gilroy or South Valley Newspapers. Reach him at 847-7109 or e-mail him at cbone@gilroydispatch.com.