Archive for Tuesday, July 4, 2006

Sales tax numbers to reach ‘90s levels

July 4, 2006


The Lawrence economy is on pace to post its best sales tax numbers since the boom days of the late 1990s, according to numbers released Monday by the city.

"It is encouraging right now," said Ed Mullins, the city's director of finance who monitors the sales tax numbers. "But six months doesn't make a year. There are a lot of factors that point against it continuing at that pace."

Through June, the city's sales tax collections were up 6.1 percent - or $354,000 - compared to the same period a year ago. The 6.1-percent growth rate would be the highest for a single year since 1998 when collections grew by 7.8 percent. If it finishes the year at that level, it also would mark the first time since 9-11 that collections have grown by more than 5 percent.

"It think it took everybody quite a bit of time to recover from 9-11, but the economy seems to be going well right now," said Joe Flannery, president of Weaver's Department Store, one of the city's larger retailers.

Flannery said the numbers were surprisingly strong for the second quarter of the year. He guessed that part of the increase may be attributed to a local and national slowdown in new home purchases.

Sales tax collections

Browse city and county-wide sales tax collection data from 1995-2006. Go »

"We have noticed in the past that people buy more apparel and general merchandise when they are not spending as much money on big ticket items like homes and cars," Flannery said.

Mullins, though, says he's not ready to predict that sales tax numbers will put up a banner year. For budgeting purposes, he's told city leaders to anticipate a 4-percent increase in sales tax collections.

Mullins said high gasoline prices continue to pinch people's pocketbooks, and a series of interest rate hikes by the Federal Reserve is likely to slow the economy down.

By the numbers

Here's a look at how much Lawrence sales tax collections have grown: 2005: +3.5 percent 2004: +4.5 percent 2003: +1.8 percent 2002: Less than 1 percent 2001: +3.8 percent 2000: +1.9 percent 1999: +5.2 percent 1998: +7.8 percent

The biggest wild card, though, may be the weather. Both Mullins and Flannery said an active hurricane season that knocks out refineries along the Gulf Coast could be particularly damaging to the economy because of what it would do to already elevated gasoline prices.

"Gas prices would go well over three dollars," Flannery said. "If it gets to $3, everybody would really start to cut back. Three-dollar gasoline would really have a psychological impact on people."

The city's sales tax collections lag actual sales by about two months. In other words, the six sales tax collections for 2006 would include some sales actually made in November and December of 2005, and it would not include many sales made in May and June of this year.


Sigmund 11 years, 6 months ago

And to you Filbet... I mean Bozo. YAFPFB.

just_another_bozo_on_this_bus 11 years, 6 months ago

This is a mostly meaningless statistic, just as the supposed decrease in population is interesting, but not very useful for much of anything.

It does tell us that the factors which affect retail sales have been more favorable than not, but city government policies and actions are just one among many factors.

just_another_bozo_on_this_bus 11 years, 6 months ago

"The Spin Doctors are at work, so button up!"

You never stop spinning, Marion, so the warning really isn't necessary.

Godot 11 years, 6 months ago

Behold the effect of destination based sales tax.

People live in Lawrence, work in Overland Park and buy their electronics, furniture and appliances from BenchMark and Nebraska Furniture Mart and Cosco, etc., and the sales tax flows right back to Lawrence.

Maybe residential growth does pay for itself, after all.

lunacydetector 11 years, 6 months ago

don't forget that the sales tax rate was lower in 1995 than today.

regardless, i do NOT believe these numbers since lawrence reached the $billion mark a full year before the city said so. i predict in a few months that a correction will be made and nobody will tell anyone - just like last time.

KsTwister 11 years, 6 months ago

Why the increase? Maybe because your state decided it.

So hold off on the flowers downtown, I think they want some education funds. With inflation figured into then its nothing,nothing at all.

just_another_bozo_on_this_bus 11 years, 6 months ago

"and buy their electronics, furniture and appliances from BenchMark and Nebraska Furniture Mart and Cosco, etc., and the sales tax flows right back to Lawrence."

That's utter nonsense. Wyandotte and Johnson counties are not sending sales tax receipts to Douglas County.

just_another_bozo_on_this_bus 11 years, 6 months ago

Out-of-town lumber yards and supply houses have been delivering here for years, and half their customers are sales tax exempt, anyway, so that wouldn't account for much of any of the increase indicated in this article.

I seriously doubt that Neb. Furn. Mart's sales of furniture that they deliver here have increased enough to significantly contribute to the overall increase in sales tax reciepts. Any taxes on anything bought on-site and brought home by the customer would go to Wyandotte County, anyway.

Godot 11 years, 6 months ago

If a product is delivered to a location in Lawrence, the sales tax is paid at the Lawrence rate, and is disbursed to Lawrence.

This is why Wyandotte and Johnson countians are up in arms over the destination based sales tax scheme. They pay for the infrascture to support the retail shopping and the stores that sell durable goods, then lose the sales tax.

Read on.\

Godot 11 years, 6 months ago

It would be helpful if the JW would publish a breakdown of the sources of the total sales tax revenue, year to date.

just_another_bozo_on_this_bus 11 years, 6 months ago

I agree, Godot, but Douglas County has to send similarly collected receipts out, too. I'm sure it's not as much as they recieve, but taken altogether, the net reciepts of destination-based taxes probably aren't that large, and probably make up a very small part of the increase reported in this article.

Godot 11 years, 6 months ago

If the net result of destination based sales tax is neglible, why go to the trouble to implement it?

Godot 11 years, 6 months ago

Here is the relevant paragraph from the link above:

"Texas is not the only state that has encountered problems trying to implement destination-based sourcing. Recent legislation in Utah repealed that state's destination sourcing requirement and legislation in Ohio would eliminate destination-based sourcing for in-state vendors. The most telling example of the problems is found in Kansas. Kansas changed to destination-based sourcing in 2003; however, on March 24, 2006, the Kansas House of Representatives advised the Streamlined Compliance Review Committee that Kansas is not in compliance with the SSUTA because of problems implementing and enforcing destination-based sourcing. More than 50 percent of the estimated 25,000 businesses affected by Kansas' change in sourcing sales are not collecting, reporting and remitting sales tax in accordance with the new laws; and, due to the difficulties of compliance in a state with more than 750 local sales tax jurisdictions, the Kansas Legislature and the Kansas Department of Revenue have chosen to not enforce destination-based sourcing for sales made in Kansas. In March the Kansas Legislature referred the bill to a committee for further action. "

However, in practice, the sales tax reports that businesses must submit to the state require that sales be identified by, and taxed at the rate of, the destination jurisdiction.

just_another_bozo_on_this_bus 11 years, 6 months ago

Well, I don't have any strong opinion on the tax one way or another, but it would appear that is has little or no effect on the amount of sales taxes collected by Douglas County.

Godot 11 years, 6 months ago

How about it, JW? Can you please provide a breakdown of the sales tax from out-of-city purchases?

Godot 11 years, 6 months ago

Also report the sales tax Lawrence loses to other cities. I would suspect it would be small because Lawrence's retail base is pretty small. The businesses that first come to mind that would be most likely to ship retail sales out of town would be Kief's, Martin-Logan, Footprints, and Waxman. There are probably others. And then, the artisan contractors, the electricians, HVAC, plumbers, etc., are required to report their out-of-town sales, as well.

Let's hear it, JW.

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