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Sales‑tax Q3: Monterey’s initial 6.6% gain largely erased after adjustments; committee approves update
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Summary
Rafaela told the committee Monterey's quarter‑3 sales tax initially showed a 6.6% increase versus the prior year but that HDL adjustments and timing effects left the city effectively flat year‑over‑year; the committee approved the update and asked staff clarifying questions about confidential top producers and 'pools'.
Rafaela presented the quarter‑3 sales‑tax comparison (July–September 2025 vs. the same quarter in 2024). She said the state's 1% sales tax was up about 1.9% and the county up about 3%, while Monterey initially showed a 6.6% increase before adjustments. After HDL performed regular adjustments — correcting late filings, reassigning receipts and removing one‑time anomalies — the reported city result was effectively flat year‑over‑year.
Rafaela summarized business‑group contributions shown in the packet (alphabetical for confidentiality): restaurants accounted for about 42% of the taxable base listed, 'pools' (pooled online sales such as marketplace transactions) about 17%, consumer goods about 17% and fuel about 2%. A committee member asked about an appearance by "Fuji Medical Systems" and whether that represented a new local business; Rafaela said confidentiality rules prevent staff from discussing taxpayer specifics but that medical/biotech can reflect one‑time, large equipment purchases that create spiky results.
On 'pools', Rafaela explained that pooled online sales are aggregated at the county level and distributed among cities via weighted formulas; that is, a county pool is apportioned to cities based on the county’s distribution method and may be adjusted in future reporting. She added that HDL audits and routine corrections explain much of the difference between the initial higher figure and the adjusted flat result.
The committee moved and approved the sales‑tax update for quarter 3. Staff also announced a staffing note: Justin Chung had resigned effective Jan. 31 and Michael Baum was recently confirmed by the city council and took the oath of office earlier in the meeting.
Next steps: The committee accepted the update; staff will continue to provide confidential top‑producer lists in packet formats allowed by HDL and will monitor adjustments in subsequent quarters.
