These 25 Elk Grove retailers are the largest sources of revenue - Therein is Elk Grove's real economic development philosophy
https://www.elkgrovenews.net/2024/06/these-25-elk-grove-retailers-are.html
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| Shop until you drop is Elk Grove Mayor Bobbie Singh-Allen's economic development strategy. | |
One misconception about California municipal revenue is what makes up the largest single source of a city's general fund revenue. If you were to say property taxes, you would be incorrect.
For most California municipalities, including Elk Grove, the largest single source of tax revenue is sales taxes. For Elk Grove's fiscal year 2025, which starts on July 1, sales tax collections are over one-third of general fund revenues.
The fiscal year budget for 2025, which Mayor Bobbie Singh-Allen and her four councilmen will approve at this Wednesday's city council meeting, shows sales taxes paid on consumer purchases are forecasted to be $38.3 million. The city's total general fund revenue for the fiscal year is expected to be $105.7 million.
Within the 2025 city budget is the graphic below. It shows the top 25 sales tax sources.
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Reliance on sales tax revenue is one of the long-term effects of California's historic voted-adopted 1978 Proposition 13 property tax reforms. Since municipalities could no longer rely on escalating property tax revenue, another source had to be tapped.
Coincidental to Proposition 13 was the nationwide emergence of big box stores like Walmart and Home Depot and various membership stores like Costco. Big box stores like Home Depot generated far more sales tax revenue than the corner hardware store, so there was and continues to be motivation for the development of these retailers, often at the expense of locally owned businesses.
Vehicles, the largest ticket item for most consumers, were also included in this mix, resulting in the proliferation of auto malls.
For all the talk in California about developing mass transit and replacing fossil fuel vehicles, until sales taxes from gasoline and vehicle sales are replaced, cities will be incentivized to sell more and more vehicles at the expense of promoting mass transit. The same goes for fossil fuel taxes, although to a lesser extent because of electric vehicles.
Not surprisingly, included in Elk Grove's top 25 sales tax producers are dealers at the Elk Grove Auto Mall, two locations each for Belair, Kohls, Ross, and Walmart, all of the Shell gas stations, all of the Chevron stations, and big box retailers Costco and Home Depot. Interestingly, the list includes one stand-alone gas station, the Grant Line Road Arco.
Elk Grove did not disclose how many dollars these retailers contributed to the $38.3 million in sales tax revenues.
By no coincidence, Elk Grove Mayor Bobbie Singh-Allen and her city council have directed the city's economic development director, Darrell Doan, to focus his efforts on the so-called Project Elevate retail development. More retailers at Project Elevate bring more sales tax revenue, which is the general fund's mothers' milk.
Not surprisingly, the $300 million Sacramento Zoo relocation project, which is only being mildly promoted as an economic driver (see image below), is being managed by the innovations department, and the economic development department is not even listed as being in a supporting role.
So, as Elk Grove's development marches forward, all those 25,000 jobs promised by former Elk Grove Mayor Gary Davis are dust in the wind. It was never about getting Silicon Valley jobs to Elk Grove like Doan and the so-called Sacramento regional economic development guru Barry Broome promised - that was a sideshow.
It has always been and will continue to be about selling cars at the Elk Grove Auto Mall and building large sales tax-generating shopping centers. Who knows, with the highly-touted opening of Nordstrom's Rack, maybe next year's list will expand to 26!
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Elk Grove is fortunate that the vast majority of its population are employed in (or retired from) government or quasi-government agencies with guaranteed paychecks that typically adjust for inflation. The other major income source is Silicon Valley that has enabled the Bay Area transplants to buy a home and live the American Dream in Elk Grove with wages that are above the national average.
This unique workforce is largely insulated from the real-world economy facing the rest of the country, and it has enabled the city to successfully pursue a simple economic development strategy of unchecked sprawl: bland two-story 'monster homes' and the natural byproduct of population growth--new retail!
Armed with a warchest of tax dollars, our crack team of highly paid economic development staff can literally throw incentive money out there to retailers and brag to the City Council about all of the low-paying retail jobs they created.
On Wednesday night, be prepared once again for a lot of crowing about the budget and the great job they are all doing for us. Just keep spending or the whole house of cards will come tumbling down!
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