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 Â»
"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.