The City Council this week approved proposed agreements that are required to implement the new half-cent sales tax.
The new sales tax goes into effect on April 1. (See related story)
The newly elected council members were not yet sworn in when the vote was taken.
This was a Consent Calendar item. Consent items are voted on collectively without discussion unless a council member pulls one for further discussion. Nothing was pulled from the Dec. 9 Consent Calendar.
Background
“On November 5, 2024, Seal Beach voters passed Measure GG, a sales and use tax ordinance,” according to the staff report by Finance Director/Treasurer Barbara Arenado.
“The approved ordinance provides that the increase of 1/2% new tax will be collected by the California Department of Tax and Fee Administration (‘CDTFA’) and remitted to the City, as with existing sales and use tax revenues,” Arenado wrote.
“As a condition of collecting, accounting for, and remitting the tax revenue for the City, CDTFA requires that the City enter into administrative agreements for CDTFA to 1) conduct the preparatory work necessary before the City’s tax can be collected; and 2) collect and administer the tax on behalf of the City. Under each agreement, the City must compensate CDTFA for the services pursuant to rates established by State statute and regulation,” Arenado wrote.
The costs will be taken from the revenue before the funds are paid to the city, according to Arenado’s report.
“The CDTFA collects the City’s sales tax revenue, and the agency currently performs these services for cities throughout the State, including Seal Beach,” Arenado wrote.
“The proposed resolution also authorizes the City’s current sales tax consultant, Hinderliter, de Llamas & Associates (HdL), to review sales tax records on the City’s behalf as well,” Arenado wrote.
“HdL’s services include verifying that the City receives the revenue to which it is entitled, and searching for additional revenue from sales and use tax sources,” Arenado wrote.
Cost
“The increased revenue is unknown at this time but is anticipated as approximately $3.0 million based upon the projection from HdL,” Arenado wrote.
“Sufficient funding has been included in the Adopted Budget for administrative costs but may be offset by charges by the CDTFA prior to distribution, not to exceed $175,000 per the agreement,” Arenado wrote.
