To: Board of Supervisors
From: Monica Nino, County Administrator
Report Title: Sales Tax Audit and Information Services
☒Recommendation of the County Administrator ☐ Recommendation of Board Committee
RECOMMENDATIONS:
APPROVE and AUTHORIZE the County Administrator, or designee, to execute a contract amendment with Hinderliter, de Llamas and Associates for sales tax audit and information services extending the termination date from June 30, 2026 to June 30, 2031 and increasing the payment limit by $225,000, from $1,125,000 to $1,350,000.
FISCAL IMPACT:
The contract costs are based on three components: (1) a flat annual fee for sales and use tax information and technical assistance, which will be adjusted annually based on the 12-month percent change in the most recently published annual Consumer Price Index for All Urban Consumers; (2) a flat annual fee for Measure X transaction tax information and technical assistance, which will remain fixed for the term of the agreement; and (3) 15% of new sales, use, and transaction tax revenues recovered by the County as a result of HdL's audit services. Historically, the County has recovered substantially more revenue than the cost of this contract. (100% Measure X)
BACKGROUND:
Hinderliter, de Llamas and Associates (HdL) developed California's first computerized sales tax management program and secured the legislation that allows independent verification of the California Department of Tax and Fee Administration allocation of sales tax revenues to local governments. The County began contracting with HdL in 1990 to monitor sales and use tax receipts, and to identify, correct and recover allocation errors that impact the County's revenue. The consistent fee structure - flat annual fee plus 15% of recovered revenues - has remained in place throughout the entire contract history. HdL has been very successful in locating mis-allocated revenues on behalf of the County. Additionally, HdL provides sales tax revenue forecasting to assist with annual budget development, and in-depth quarterly sales tax information and specialized analysis to the County for budget monitoring. The need for detailed sales tax information is essential to revenue forecasting and economic development planning.
CONSEQUENCE OF NEGATIVE ACTION:
The County will not have comprehensive resources to recover mis-allocated sales and use tax revenue or essential information for revenue forecasting and economic development planning.