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Consultant outlines Chico sales- and transaction-tax mechanics, short-term outlook
Summary
HDL Companies provided an overview of sales-and-use tax sources, pool allocations and Measure H impacts for Chico; staff and council heard that statewide sales tax growth has slowed and that Chico’s Measure H receipts should rise slightly in 2025–26.
Kent Nordhoff of HDL Companies presented an overview of how California sales- and use-tax revenues are collected, allocated and distributed to local jurisdictions and gave Chico-specific data during the Aug. 19 City Council meeting.
Nordhoff explained the difference between point-of-sale (Bradley-Burns) allocations and pooled indirect allocations from out-of-state and online sales. He said the California Department of Tax and Fee Administration (CDTFA) allocates direct place-of-sale revenues to cities and distributes use-tax pools formulaically to counties and cities; in the most recent quarter HDL showed about $1.88 million entered the Butte County pool, with Chico’s share approximately $1.4 million that quarter (Chico’s pool allocation was reported at about 73.8% for the quarter and ~69% for the prior year).
Nordhoff walked council through familiar concepts — taxable items are largely tangible personal property; certain categories such as food, medicine and many digitally transmitted services are not taxable; and retailers that maintain a permit with CDTFA are the primary filers. He stressed reporting cadence: returns covering October–December are filed in January, reconciled by the state in February and data are generally available to jurisdictions in March, creating a lag between activity and local reporting.
On Chico-specific results, HDL’s summary showed Chico’s sales-and-use tax rate at 9.25% (including the city’s Measure H approved in November 2022 and a county Measure H noted by HDL as in effect), with general consumer goods, pooled revenues and building/construction among the largest contributors to local receipts. HDL’s near-term estimate for fiscal year 2025–26 expects sales tax roughly unchanged from the prior year and Measure H to increase slightly.
Nordhoff noted constraints on public disclosure of detailed taxpayer-level data under Government Code section 7056 and explained how HDL and staff use grouped categories, top-25 anonymized lists and other confidentiality-safe reporting to analyze trends. He answered council questions about the state of local retail, online fulfillment center impacts and the practical limits on raising local rates under state law.
Council members thanked HDL for the presentation; no council action was taken.
The presentation and the slide deck will be incorporated into staff fiscal forecasting and the city’s budget materials.
