Money & Company

Tracking the market and economic trends
that shape your finances.

« Previous Post | Money & Company Home | Next Post »

Taxable sales plummet in state

October 21, 2010 |  2:06 pm

Consumers stopped spending in California during the Great Recession, and that's had an enormous effect on the sales tax revenue collected by the state, according to a report out Thursday from the La Jolla-based National University System Institute for Policy Research.

Taxable sales in California dropped 18.5% between 2006 and 2009. In Orange County, they dropped 20.1%, in Los Angeles County, they fell 20.1% and in Riverside County, they shrank 25.1%.

The report focuses on San Diego County, where taxable sales were down 17.4%, and where one out of every seven businesses selling taxable goods and services closed between 2006 and 2009. About 12,500 outlets closed in the county between 2006 and 2009, the report says.

"It is a brutal situation out there, as any store owners, commercial real estate broker, or retail mall owner can attest," wrote W. Erik Bruvold, president of the National University System Institute for Policy Research, in a letter accompanying the report.

Consumers spent a record $47.8 billion in San Diego County in 2006. Sales declined slightly in 2007 and 2008, and then dropped sharply in 2009 to $39.5 billion.

Sales fell to a per capita amount of $12,338 in 2009, down from $15,545 per resident in 2006. Adjusted for inflation, those 2009 figures represent the lowest spending since 1967. Consumers spent the most money at food services and drinking places and at motor vehicle and parts dealers.

There are some signs that sales are picking up this year. California is projected to show a 1% gain in year-over-year sales, compared to 0.1% in Los Angeles County and 2.4% in San Diego County.

The state raised the sales tax to 8.25% in 2009, from 7.25%. A proposition on the November ballot for San Diego residents would raise the city sales tax to 9.25%, from 8.75%.

-- Alana Semuels

Photo: Shoppers spent less during the recession, forcing some companies out of business. Credit: Al Seib/Los Angeles Times