Finance Committee Agenda and Packet 2023 09 21

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C1tyo L Louisville f COLORADO • SINCE 1878 SUBJECT: SALES TAX REPORTS DATE: SEPTEMBER 11, 2023 FINANCE COMMITTEE COMMUNICATION PRESENTED BY: MAHYAR MANSURABADI, SALES TAX AUDITOR SUMMARY: ITEM 5 Financial Update: Sales Tax Breakdown by Type, Area, and Industry In this financial update, we provide a comprehensive analysis of the City's sales tax collections, dissected by various parameters such as type, area, and industry. To summarize the findings, we've experienced a noteworthy year -over -year increase in total sales tax revenue, amounting to a 12.9%. Upon closer examination of the data, we observe the following trends within specific categories: 1. Sales Tax: 8.7% growth in general sales tax revenue. Approximately half of our sales revenue, 48%, is generated from sales occurring outside the city limits. While there has been a recent deceleration in the growth of sales outside the city over the past two months, we remain ahead by 14.6% Year -To -Date (YTD) compared to 2022. 2. Use Tax: The standout performer is our use tax category, which has surged by 52.9%. The driving force behind this growth has been new businesses relocating to Louisville, particularly those engaging in substantial building and office acquisitions. It's essential to note that, as sales tax was not collected at the time of these purchases, businesses are obligated to remit use tax directly to the city. 3. Building Use Tax: Our building use tax, collected through the issuance of building permits, has increased by 18.1 %. However, as we progress through the year we anticipate that this number will experience a gradual decrease. 4. Auto Use Tax: In contrast, our auto use tax revenue has seen a decline of -8.9%. This decrease can be attributed to a reduced volume of vehicle purchases in the post -pandemic landscape. Additionally, residents who lost their vehicles in the Marshall fire purchased new vehicles in 2022, contributing to the drop in revenue for 2023. 5. Lodging Tax: Our lodging tax revenue has surged by 39.4%. This significant increase can be attributed to two key factors: heightened travel activities in the post -pandemic era and the reopening of hotels that were temporarily closed during the initial months of 2022 due to damage caused by the Marshall Fire. In an effort to provide a forward -looking perspective, our staff has incorporated revenue projections through the end of the year. These projections, indicated in italics and grayed out, take into account net revenue post -Business Assistance Program (BAP) rebates. Despite anticipating growth in the areas of Sales Tax, Use Tax, and Lodging Tax, we do not foresee an overall increase in Total Tax Revenue compared to 2022. This projection is primarily rooted in an expected decline of over 50% in building use tax revenue. RECOMMENDATION: Receive and file. FINANCE COMMITTEE COMMUNICATION 8/21