LJWorld.com

Perhaps it is another comeback story in the making.

After months of worrying that the city's sales tax collections would take a hit as part of a national economic slowdown, the numbers are actually up through the first three months of the year.

"They look great right now, but I doubt that they're sustainable," said Ed Mullins, the city's finance director.

For now, they're giving city leaders a new reason to get out the confetti. Sales tax collections from January through March were up 9.3 percent - or about $500,000 - compared to the same time a year ago.

That's well above what City Hall leaders had expected. The city budget was built on an approximately 3-percent increase in sales tax collections for 2008.

The reasons behind the unexpected surge aren't entirely clear. All the sales are from a time period before the city started reaping the rewards of T-shirt sales and other party purchases related to the Jayhawks' NCAA tournament run. Those sales are expected to show up in April and May numbers.

City Commissioner Rob Chestnut, though, thinks the tax increase is related to visitor spending. The city's transient guest tax - the tax charged on motel rooms - surged by 65 percent in January and February compared to last year's totals.

"I think that tells the story that a lot of the increase in sales tax is being driven by people from out of town," Chestnut said. "That is exactly what we want."

Judy Billings, director of the Lawrence Convention and Visitors Bureau, said that sounds plausible to her. She believes the city's economy received a boost from the USA Track and Field Junior Cross Country National Championships. That event attracted nearly 8,000 participants and family members to Lawrence in December, but the sales related to the event showed up in the 2008 distributions because of the lag in reporting times.

"There were people all over town for three to five days, and they weren't just here for cross country," Billings said. "They were eating, shopping and buying."

Billings said she thinks the city will get another boost in June when about 2,000 athletes are expected to participate in a national Ironman triathlon competition at Clinton Lake. Billings said 1,700 people from 36 states and five countries already have registered for the race.

Mullins, though, is urging city leaders to keep the sudden surge in collections in perspective.

He said one possible reason sales tax numbers are up could be inflation. Food and energy prices both have been hit by higher inflation rates than in past years. If sales taxes are up because of inflation, that would not be the best news for the city. Higher inflation - especially for energy - could cause the city's expenses to increase more than projected.

The higher fuel prices already are beginning to show up in the city's budget. The city receives a portion of the state excise tax on gasoline. That excise tax is charged based on the number of gallons of fuel purchased, not on the price of the fuel. As high prices force consumers to conserve fuel, the city's excise tax collections normally go down.

Mullins said that's been the case thus far in 2008. The city through the first three months has received about $200,000 less in motor fuel taxes than it did during the same period last year.