Exclusive: COVID battered SLO County’s retail economy. Just look at the sales tax decline

Editor’s note: This is part two of a two-part editorial series on the impact of COVID-19 on tourism and business in San Luis Obispo County.

Even as we hunkered down in SLO County, we never stopped shopping.

Early on in the COVID-19 pandemic, we stocked up on toilet paper, hand sanitizer and canned goods. Then we went for cozy slippers and sweat pants. And as the weeks dragged into months, we took up hobbies like knitting and baking — which required the purchase of special supplies — and we snapped up so many jigsaw puzzles that some editions sold out.

One of the major beneficiaries of all this spending?

Amazon.

Sales tax records for 2020 show that every city but one — Grover Beach — saw a decline in point-of-sale purchases at places like retail stores, supermarkets and restaurants.

But online purchases were significantly higher — not a surprise given the conditions we faced.

A countywide pool that includes sales tax revenue generated by e-commerce increased 41% last year, from $7.8 million in 2019 to $11 million in 2020.

Taxes on point-of-sales purchases, meanwhile, dropped 12%, from $50 million in 2019 to just under $44 million in 2020, according to reports provided by the office of the county auditor-controller-treasurer-tax collector.

The upshot: Choosing Amazon and other e-tailers over local stores was a huge blow for small businesses — especially those deemed non-essential.

We saw the results: At one point, San Luis Obispo ranked in the top 10 in the nation for the number of permanent and temporary business closures, according to Yelp.

City revenue

City governments, which rely on sales tax revenue to help pay the bills, were affected too.

But they managed to recoup at least part of that loss from their larger shares of revenue from the countywide pool, which gets divvied up among the seven cities and the county.

The city of San Luis Obispo, for example, was down nearly 9% in sales tax revenue from point-of-sale transactions, but its share of pool money rose from $2.4 million to $3.5 million — a 31% increase.

Here’s how much each city received in sales tax in 2020. (Amounts don’t include their shares of the county pool.)

• Arroyo Grande: $3.3 million in 2020, compared to $3.6 million in 2019, a decline of 8%
• Atascadero: $3.5 million in 2020, down from $3.7 million in 2019, a 6.6% decrease
• Grover Beach: $1.6 million in 2020, up from $1.5 million the previous year, a 1% increase
• Morro Bay: $1.5 million in 2020 compared to $1.8 million in 2019, a decrease of nearly 15%
• Paso Robles: $8.5 million in 2020, from $9.2 million in 2019, a drop of 8%
• Pismo Beach: $2.3 million in 2020, from $2.6 million in 2019, a 14% decrease
• San Luis Obispo: $14 million in 2020, from $15.4 million in 2019, a decline of 8.8%

The unincorporated county, which includes Cambria, Cayucos, Los Osos, San Simeon, Oceano and Nipomo, took the biggest hit.

Sales tax revenue dropped from $12 million in 2019 to $9 million in 2020 — a nearly 24% decrease.

But again, the pool provided a cushion — the county’s share was $2.3 million.

We didn’t fall off a cliff

Overall, sales tax revenue in California didn’t suffer the huge hit many had initially feared — even as businesses closed and unemployment grew. That was due in part to the $600-per-week in additional unemployment benefits provided during part of the year, which increased disposable income. Stimulus payments helped as well.

At times, consumer spending even broke records. The California Legislative Analyst’s Office reports that U.S. retail sales grew 5.3% from December 2020 to January 2021.

“This increase was very large by historical standards — the fourth-largest monthly increase since data collection began in 1992,” the report says.

Yet for many brick-and-mortar stores — which were already struggling to survive the competition with e-commerce even before the pandemic — the outlook remains far from rosy.

Since COVID hit, government grants and loans have helped. And now that SLO County agencies are collectively receiving $85 million from the latest round of stimulus funding, more assistance should be coming to the rescue of local businesses. (Are you listening, city councils and board of supervisors?)

But that’s not a viable long-term solution.

If we want SLO County businesses to survive not just through the pandemic, but also into the future, “shop local” can’t just be a platitude that we agree with in theory, but don’t put into practice.

We aren’t saying to boycott the Amazons of the world.

E-commerce is a remarkable service — never more so than during the worst stages of the pandemic, when many people were afraid to venture out at all, with good reason. Nor are we second-guessing the decision to impose restrictions on local businesses deemed non-essential. Of course public health must come first.

But if e-commerce becomes our default mode of shopping for everything from fruit to furniture — to the point where we rarely support local merchants — we’ll continue to see an exodus of local businesses long after this pandemic is over.

That means more empty storefronts, and while that could lead to full-scale transformation of downtowns into hubs for education, entertainment, light manufacturing and residential uses — to cite some examples urban planners are suggesting — that’s going to take time, commitment and energy.

In other words, it’s in the far future.

For now — while we’re in the process of recovering from the worst global health crisis we’ve seen in generations — let’s focus on the near future.

Shopping online from the comfort of a recliner or a couch made perfect sense while we hunkering down on account of COVID.

But as the pandemic eases, it’s time to shake off those habits, rejoin the world and support our local businesses.