Sales tax revenue is an important funding source for Lawrence and Douglas County government. A shortfall in estimated sales tax revenue for this year is prompting the city to look at serious budget cuts, and a new 1 percent sales tax is being considered as a way to fund city key projects without raising property taxes.
The current attention on sales tax also puts additional focus on retail operations that generate sales tax revenue for Lawrence. As has always been the case, officials are concerned about the number of Lawrence residents who shop elsewhere and the limited success Lawrence has in drawing shoppers from surrounding areas.
Being sandwiched between Topeka and Kansas City, makes it easy for shoppers to spend their retail dollars elsewhere, so how does Lawrence attack that trend?
Attracting new retail businesses to the city is the obvious answer, but not all retail businesses, it seems, produce the same level of benefit for the local market.
If Lawrence is trying to raise sales tax revenue, the best kind of business to have is something that no one else has, a business with products or services that aren't readily available elsewhere. Lawrence people would want to shop there, and it's worth the trip for people from out of town. Lawrence already has some of those businesses, many of them in our attractive downtown.
Businesses that are different, but not unique, also have some drawing power. The new CVS store being built at 23rd and Iowa streets will offer many of the same products and services already available at other locally owned and chain stores in Lawrence. However, it may attract at least a few customers who prefer CVS over the other options and find it more convenient to come to Lawrence than to other cities where CVS is located. It also benefits consumers by providing additional choice and competition.
The new businesses that probably do the least to boost local sales taxes are duplicates of existing businesses. A second Wal-Mart store in Lawrence would be expected to collect more sales tax than the smaller CVS store, but it seems unlikely the company will double its sales by doubling its number stores in Lawrence.
A few shoppers from Lecompton or Perry might drive to Sixth Street and Wakarusa Drive instead of Topeka to shop at a new Wal-Mart, but will the store do as much to keep shoppers in Lawrence or draw them from surrounding areas as even a similar store from a competing chain? A Kmart store, for instance, might attract shoppers who want to buy Martha Stewart sheets, which are available in Kmarts in other cities, but not at Wal-Mart.
This isn't a knock on Wal-Mart, nor is it a plea for additional government micromanaging of what businesses should be allowed to locate in Lawrence. It might be just idle speculation or it might be something local developers should consider as they plan new retail shopping areas. With rising gasoline prices and busy schedules, many shoppers would prefer to shop closer to home - and people are going to be less willing to drive to another city to shop unless it has something special to offer.
If Lawrence really wants to boost its sales tax revenue, it needs to change its attitude about retail business and the downtown and figure out ways to offer a convenient, attractive and easy-to-access retail experience that shoppers can't find in other nearby cities.