City sales tax collections, stagnant during the past year, have begun to slide in recent months, officials said last week.

“It’s not the ’90s anymore,” City Manager Mike Wildgen told the Lawrence City Commission. “The ’90s were growth.”

Kalli McClure, 12, of Lawrence shops through the shoe department at Shark's Surf Shop, 813 Mass. Although business leaders say retail sales have been picking up recently, the city's sales tax revenues have started declining, and the city may have to cut back on its budget.

Wildgen and other officials said it was too early to call the dip a trend, but warned city budgets could be hit if sales tax collections didn’t return to their usual levels.

That, in turn, could force city commissioners to decide whether to further increase property taxes they’re now expected to approve an 0.8-mill increase for 2003 or try to find savings through cuts in city services. A mill is $1 of tax for every $1,000 in a property’s assessed value.

“It’s a concern,” Commissioner David Dunfield said. “Month-to-month, sales tax numbers tend to jump around a lot. But certainly, if that trend continues, it’s going to cause changes in the way we look at the budget.”

Combined revenues from the city sales tax and the city’s share of the countywide sales tax were $1.39 million in May, down 8 percent from $1.52 million in May 2001. Sales tax revenues were nearly $1.36 million in June, a 5.5 percent drop from $1.44 million the year before.

Those declines have offset gains earlier in the year, so the $8.71 million in total collections has fallen behind the $8.76 million collected through the first six months of 2001.

“Up until this last month, we were still pretty much ahead,” said Ed Mullins, the city’s finance director.

That’s just less than half the $17.97 million the city had budgeted for sales tax revenues for this year. Sales tax collections in the second half of a year are typically a bit stronger than the first half, however.

“We’re still likely to exceed our budget, and quite a bit, as long as (the decline) doesn’t snowball on us,” Mullins said.

Lawrence business leaders said they were surprised by the sales tax shortfall. Business, they said, seems to be good.

“The word I hear on the street is the exact opposite, that things are starting to pick up,” said Melodie Christal of Downtown Lawrence Inc.

	Here’s a look at city sales tax revenues through the first six months of 2002 and 2001. The figures reflect the combined revenues from the city sales tax and the city’s share of the countywide sales tax. Month 2001 2002 January $1,476,883 $1,521,151 February $1,647,080 $1,718,831 March $1,413,372 $1,439,232 April $1,267,315 $1,270,710 May $1,518,564 $1,398,103 June $1,437,656 $1,357,962 Total $8,760,870 $8,705,989 Source: City of Lawrence

Tim Holverson, vice president of public policy for the Lawrence Chamber of Commerce, agreed.

“We all know that times are a little bit tighter right now,” he said, “but we had not heard that” collections were declining.

City officials, however, said the decline was probably to be expected.

“I don’t think it’s just here; it’s nationwide,” Mullins said. “I think the consumer sentiment is going down. There’s a lot of negative happening now with the different corporations having problems … I think that’s kind of weighing on the consumer.”

“It would be reasonable to think that at some point some of the revenue challenges the state has would trickle down to the local level,” Wildgen said.

The nearly $18 million in expected sales tax revenue makes up almost 18 percent of the city’s $101 million operating budget.

“That’s a significant source of revenue,” Wildgen said.

Money from the sales tax goes to support emergency services, such as the police and fire departments, as well as city parks and to keep property taxes lower otherwise.

Officials said it was “premature” to say where cuts in city services might come if the downward trend continues. And Wildgen said that things in Lawrence still weren’t as bad as elsewhere.

“We’ve got a very active economy,” he said, “compared to some of those cities in western Kansas.”