Great news: Fresno’s sales taxes are soaring. Can you guess where the money is coming from?
Finally, some good news.
While record high gas prices, skyrocketing inflation, and another year of drought are having a severe impact on our community — hitting working families especially hard — there is a bright spot buried in, of all places, the Fresno city budget, which includes massive increases in sales tax revenue, thanks to Amazon and Ulta.
That’s right. This typically mundane municipal document, filled with numbers and charts that can make one’s eyes go blurry, contains news of great importance for Fresno residents. It’s not the debate between the City Council members and mayor over how to spend our city’s revenues, although we all should be paying attention to that, too.
The story we ought to be celebrating is the rapid growth of our local sales tax revenue and what it says about Fresno’s economic development and the opportunity it creates to better our community. These additional dollars will help to improve public safety, repair roads, and expand jobs throughout the city.
For more than a decade, Fresno’s sales tax has been the second-largest source of tax revenue for the city behind property taxes. Yet, despite the booming home prices of the past few years that have generated record property tax revenue for the city, our sales tax revenue has grown even faster, and is now nearly tied as Fresno’s largest source of revenue.
How to attribute this rapid growth in sales tax revenue? Well, city staff spell it out in the city budget, summarizing the final three months of last year: “Miscellaneous retail was the largest business segment at 26.6 percent of the total quarterly sales tax received. The main contributor within this segment was Amazon (74.7 percent of segment, followed by Ulta at 6.0 percent).”
Based on the fiscal year 2022 sales tax revenue projections of $148.7 million, Amazon and Ulta alone are projected to generate as much as $31.9 million in sales tax revenue for the city this year. Combined, these two businesses are likely the largest single source of direct general fund revenue for the city. The projected increases in future years are even greater, which will be needed once the hundreds of millions of COVID relief funds are no longer part of Fresno’s spending plan.
The exponential growth in Fresno’s sales tax revenue over the past five years is truly amazing — increasing by 42 percent. It took the proceeding 20 years for Fresno to experience a similar amount of growth in sales tax revenue.
And, unlike traditional sales tax revenue that is only generated from purchases within the city, Fresno receives sales tax revenue from items that are shipped from our local retail distribution centers — that revenue is collected by the city whether the shopper lives within the city or is located in another state.
Fresno’s burgeoning retail distribution economy is a genuine game changer. While agriculture is deeply rooted in our economy and way of life, the retail distribution industry brings needed economic diversification. It not only is creating thousands of quality jobs with health-care benefits for residents today, but it is providing the catalyst to make Fresno a leading center for technology and manufacturing as we expand beyond agriculture. That means a better future, more jobs, and greater opportunities for our children to be able to remain and thrive here.
What’s more, Fresno’s retail distribution economy is leading the way in adopting green technology that minimizes its environmental footprint. From cool roofs and solar generation that reduces energy use to low water usage, the retail distribution sector embraces sustainable practices, while creating jobs and critical revenue to fund our city services.
As California moves toward alternative fuel for personal and commercial vehicles, Fresno is in the center of innovation and progress. Zero emission fueling stations will be our next frontier and we are working to ensure that Fresno and the Central Valley will be ready when the infrastructure is in place.
We deserve some good news in Fresno, and we’re seeing it take shape with the growth of our retail distribution sector and its needed diversification of our economy.
