Local Economy Bounces Back to Pre-9/11 Levels

By Olin Ericksen and Jorge Casuso
Staff Writers

April 26 -- Thanks to a strong fourth quarter, Santa Monica last year posted its highest sales revenues since 9/11, according to figures released by the City this week.

The hike in sales taxes, projected at $28.5 million, or 3 to 3.5 percent over last year, reflected growth among all major business groups -- from retail to hotels to construction -- and across most of the city.

"Overall, the local economy appears to be relatively strong, based on sales tax revenues and tourism increases over the last twelve to eighteen months and the gradually improving economy at state and national levels," Finance Director Steve Stark said in a statement.

Cash registers ringing in holiday purchases helped overall sales jump 10.6 percent in the final quarter last year, compared to the same period in 2003, putting Santa Monica on par with the state and county, which saw sales increase about 11 percent.

"The fourth quarter looked stronger than we expected," Stark said. "Sales tax in the fourth quarter was very strong after somewhat lower growth in the previous two quarters."

Leading the hike in all economic sectors during the holiday crunch was retail -- the City's largest source of tax revenue -- which jumped 7.4 percent compared to the fourth quarter of 2003.

Following the upward trend, vehicle sales and leases drove auto tax revenues up 6.9 percent, while restaurants and hotels saw an 10.8 percent increase, according to the report.

The business and industry group saw a "healthy" 14.9 percent increase in sales, while sales grew by 4.5 percent in construction, the report said.

With tax figures showing growth in every business sector over the last quarter, most areas in the city appeared to benefit from holiday spending, with businesses along Pico Boulevard and in Santa Monica Place, the indoor mall Downtown, notable exceptions.

An 11.2 percent hike in the sale of new and used vehicles generated nearly $1.25 million in sales taxes during the final quarter of 2004, making Santa Monica Boulevard the "greatest revenue-producing area in the city," according to the report.

The strip lined with auto dealers was followed by Wilshire Boulevard, with more than $860,000 in sales taxes in the final quarter, up 9.7 percent over the same period the previous year.

The Third Street Promenade generated nearly $760,000 in sales taxes, or a 13.2 percent increase over the same quarter in 2003, according to the report.

An influx of tourists and some new stores accounted for an upward swing in sales in other parts of the City as well.

Ocean Park Boulevard posted a 20.7 percent increase in fourth quarter sales over the previous year, Main Street saw a 19.4 percent hike and Montana Avenue a 13.4 percent increase.

Ocean Avenue, which includes the hotel strip along the beach, saw sales go up 10.3 percent in the final quarter, while the Bayside District, which includes the Downtown exclusive of the Third Street Promenade, saw sales increase 8.3 percent, according to the report.

Although taxes are expected to continue on the upswing in upcoming years, factors beyond the city's control could temper that growth, Stark cautioned.

"Economic and political events at the state and national levels, including higher energy prices, the threat of higher inflation, and higher interest rates, continue to cause uncertainty in the economy," Stark said.