SALES TAX FUNDS FALL FLAT POOR AUTO SALES HIT CITY COFFERS.

Byline: EUGENE TONG Staff Writer

SANTA CLARITA -- The city's sales-tax revenue edged up just 0.4 percent to $7.08 million in the fourth quarter of 2005 compared with a year earlier, dragged down by weak year-end auto sales, officials said Tuesday.

The increase amounts to about $28,000, compared to the same three-month period in 2004, when revenues from the city's 1 percent tax shot up 8.1 percent -- $506,933 -- for a total $6.76 million.

Leading the decline were transportation sales -- down 4.1 percent from a year ago -- and from business-to-business transactions, which fell 7.2 percent.

Auto-related transactions made up some 20 percent of the $30.4 million in sales tax the city expects to collect this fiscal year -- roughly 40 percent of the city's $73.7 million general fund.

Paul Brotzman, the city's director of planning and economic development, said the local Auto Row had to weather the year-end market doldrums that beset the auto industry -- higher fuel prices, rising interest rates and an end to the dealer incentive programs that drove sales in mid-2005.

``That's a cyclical impact,'' he said. ``It's not long term. We still have more auto dealers that are interested in coming to town.

``For us, the good news is we've seen growth in a number of other sectors that have offset some of the decline that we've seen in some of the auto sales. The overall result has been we have an up quarter again.''

The bright spots include a 3.5 percent increase in general retail, 4.3 percent in food products and 8.2 percent in construction sales.

``Although the increase was modest in the fourth quarter, the addition of new retail centers is supporting sales growth,'' city Treasurer Darren Hernandez said.

``Even with one sector being down, we have another sector that's up, so we're still in the black,'' Brotzman said.

Brotzman said the sales tax outlook remained rosy, with new stores such as Sam's Club and the valley's third Wal-Mart pushing retail in the city center, and new regional shopping centers opening in the next two years.

``We will continue to see growth out of the Centre Pointe area,'' he said. ``And vacancy rates for retail space or any kind of space in the city is pretty low.'' Vacancy for offices and commercial spaces is roughly 5 to 6 percent.

``Anything lower than five percent is just turnover,'' he said.

The focus on retail is just one of a three-part strategy to line city coffers, which translates into spending on parks and road maintenance.

``There are three ways to grow sales tax,'' Hernandez said. ``You open more stores, the people who live here spend more money, or you have new people move in here and they shop at the existing retail.''

That means ensuring enough well-paying jobs for residents to shore up local spending, and to consolidate the city's position as a regional shopping hub.

``The more money we can draw into this valley and keep in this valley, you'll have wealth generation,'' Brotzman said.

eugene.tong(at)dailynews.com

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