Local Economy Shows Signs of Recovery
By Jorge Casuso
August 20 -- Sales figures in Santa Monica posted a healthy growth in the first quarter of this year, giving City finance officials reason to be cautiously optimistic that the local economy may be in the midst of a slow recovery.
Sales tax receipts for the first three months of this year increased 7.5 percent over the same period a year ago, outpacing the 6 percent hike posted by the state and the 4.9 percent increase for the county.
“It appears that we’re in a recovery,” said Steve Stark, the City’s finance director. “However, uncertainty exists regarding the overall strength of the economic recovery.”
“In general the figures look good,” said Gewn Pentecost, senior economic analyst for the City's Economic Development Division. “There was general across-the-board improvement. It’s good to see the numbers start to come back.”
The sales hikes were reflected in all sectors of the sales economy and in nearly all parts of the City, according to the adjusted sales tax receipts.
Increased demand and the opening of new businesses boosted sales of general consumer retail goods, with significant increases posted by women’s apparel (17.2 percent), family apparel (16.8 percent), and specialty stores (9.8 percent).
Hotels and restaurants saw business increase 12.3 percent from the first quarter of 2003, in large part due to new businesses, while late payments from the previous quarter and, to a lesser extent, higher prices at the gas pump boosted sales at service stations by 32.8 percent.
Auto dealerships -- which have been a reliable economic engine -- saw sales hold relatively steady, posting only a 1.2 percent drop, compared to the same period last year.
Higher sales were also posted along most of the city’s commercial corridors, with Colorado Avenue leading the way with a 29.4 percent increase.
A return of tourists and new stores combined to boost Downtown’s retail activity during the first quarter, with sales up 23.9 percent on the Third Street Promenade and 22.9 percent in the rest of the Bayside District.
Santa Monica Place, which has seen a steady drop in business, posted a modest increase in sales.
The return of tourists resulted in higher sales tax revenues for the row of hotels along Ocean Avenue, which saw an increase in occupancy rates. Hotels near the beach posted a 21.8 percent hike in taxable sales in the first quarter of this year, compared to the same period in 2003.
In the first six months of 2004, Santa Monica’s hotel occupancy rate was up 5.5 percent from a year earlier to 79.2 percent, according to figures from PKF Consulting.
But local officials warn that lingering State budget woes could cloud the relatively sunny picture painted by the latest sales figures.
“There are still serious discussions ongoing in the State legislature to reduce local governments’ ability to generate sales tax revenues that could impact Santa Monica,” Stark said.
Pentecost warns that first quarter sales tax figures are an unreliable barometer and that a clearer economic picture will emerge when second quarter figures are released next month.
“First quarters are very unreliable because of shifts in weather and January is when people tend to make their business decisions,” Pentecost said.
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