Seal Beach reports property tax growth amid sales tax revenue decline

During a recent workshop held on May 8, 2025, the Seal Beach City Council discussed the Capital Improvement Program Budget and the five-year financial forecast, focusing on key revenue sources that significantly impact the city's financial health. The meeting highlighted the importance of property tax, sales tax, and utility users tax as the primary contributors to the city's general fund.

Property tax remains the most substantial and stable revenue source for Seal Beach, accounting for approximately 35.4% of the general fund. Over the past five years, property tax revenue has experienced a healthy average annual growth rate of 4.5%. Projections from HDL indicate that this growth will continue, albeit at a slightly moderated pace of around 3.5% in the coming years, barring any major economic disruptions. The strong demand for housing in Seal Beach, where the median home price is around $1.6 million, has contributed to this steady increase in assessed evaluations.

Sales tax, the second-largest revenue source, is projected to generate approximately $14.6 million for the 2025-2026 fiscal year. This category includes local sales and transaction taxes, which are heavily influenced by consumer behavior. Recent data revealed a 4.6% decline in sales tax revenues in the third quarter of 2024, primarily due to reduced consumer spending in the restaurant and retail sectors. The council noted that the city's reliance on these sectors makes it vulnerable to short-term economic fluctuations. However, HDL forecasts a return to moderate growth in sales tax revenues over the next few years, with stronger recovery expected by 2027-2028 as consumer confidence rebounds.

Additionally, the utility users tax has shown an increase compared to the previous year, contributing positively to the city's financial outlook. However, the council acknowledged challenges, including the presence of vacant commercial spaces on Main Street, which further impacts sales tax generation.

In conclusion, the discussions during the workshop underscored the critical role of property and sales taxes in Seal Beach's financial stability. As the city navigates economic uncertainties, the council's focus on these revenue sources will be essential in shaping future budgets and capital improvement projects. The anticipated growth in property tax and the potential recovery in sales tax revenues will be closely monitored as the city plans for the next five years.