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Board hears how online sales, ‘pools’ and fulfillment centers shift Benicia’s tax receipts
Summary
HDL consultant Ken Nordoff told the board that Wayfair-era changes and in-state fulfillment centers shift which jurisdictions receive sales-tax dollars and that much online activity is distributed via county pools rather than direct local allocations.
During an educational briefing, HDL consultant Ken Nordoff described how online marketplace growth and court decisions such as Wayfair changed allocation of sales and use taxes and increased the importance of county 'pool' distributions for Benicia.
Nordoff explained: "There’s a piece of that use tax that gets dumped into something called pools... And for Venetia, in this particular, it happened to be 6.1% of the overall total generated by all the agencies within Solano County." He used Benicia's (referred to in the presentation as Venetia) recent quarter as an example to show how pool formulas translate countywide activity into a local share.
He also distinguished in-state fulfillment centers, which typically generate local revenues, from sorting or processing facilities that state law does not treat as local sales-tax generators. That nuance means a community can gain or lose direct local allocations depending on whether large e-commerce activity is fulfilled inside the city.
Board members asked about examples and granularity; Nordoff said tax returns lack sufficient detail to split individual online orders between store-fulfilled and fulfillment-center-fulfilled transactions, complicating local analysis.
