$30 million. That’s the number that’s never far from the minds of City Hall budget makers.
In 2011, the city will need to collect a little more than $30 million in sales taxes in order to make budget. The public may spend a lot of time talking about property taxes, but when it comes to the city’s finances, sales taxes are a much bigger deal these days. More than 46 percent of the city’s general fund revenues come from sales taxes. Just 22 percent come from property taxes.
Lawrence city government over the last few years has become retail-driven. Just one problem: Nobody’s told Lawrence shoppers that.
For the better part of the last decade, the city’s retail industry has been in a funk — and one that appears to be deeper than just the downturn in the economy.
In 2006, the amount of per capita spending that took place in Lawrence was 12 percent higher than the statewide average. Now, the city’s per capita retail spending has fallen below the statewide average. The numbers can’t just be explained away by saying the national economy has declined significantly since 2006. The numbers compare Lawrence with other cities in the state that have had to deal with the declining economy as well. For some reason, the city hasn’t kept pace.
Trying to figure out why is a question the next group of city commissioners will have to answer. But it is far from the only retail question that will come up at City Hall. At least two other retail issues have been among the more controversial commission items of the year: a rejection of a plan to allow Lowe’s to build near Sixth Street and Folks Road and a running debate over whether new retailers should be allowed to use special taxing districts that could add 1 percent or more onto the sales tax totals of customers.
Here’s a look at what the candidates vying for the three open seats on the Lawrence City Commission are saying about retail issues.
Alstrom, an architect, has made opposing the idea of special taxing districts a major part of his campaign. Alstrom was one of the loudest critics of The Oread, a new hotel at the edge of Kansas University’s campus that makes use of a special taxing district.
“I’m just really opposed to additional sales taxes on the consumer,” Alstrom said. “It feels artificial to me.”
The special taxing districts — technically called Transportation Development Districts and Community Improvement Districts — allow the extra sales taxes to go to infrastructure improvements that help the development. In the case of Community Improvement Districts, the money also can be used for private purposes related to the development, such as building improvements, security costs and other business expenses.
But advocates of the special taxing districts have argued they are an important tool in attracting retail development. Alstrom, though, thinks the districts are a long-term threat to the city’s retail scene.
“If Lawrence becomes known as a place that has 10 or 12 different sales tax districts, I think our retail industry is really going to decline.”
In other issues, Alstrom:
• Supported the city’s decision to not allow the Lowe’s plan to proceed. He said Lowe’s was too big of a departure from the residential uses that had been approved for the land.
• Will let the free market determine whether the city’s retail market is overbuilt. He said he may have opinions about whether the city’s retail sector is overbuilt in some areas, but he said he would be hard pressed to deny a project based on an opinion that the market was saturated.
• Would support a new type of zoning district that would lessen some of the building requirements for retailers. He said the new zoning category could be used in target areas — perhaps east Lawrence — where the city wants to encourage start-up retail.
Carter, a financial adviser, said the city needs to be open to the idea of special taxing districts. He said the districts may be an important tool in attracting retail development, but he said retailers have a strong incentive to not abuse the tool.
“I still think we have to leave it open and look at it on a case-by-case basis,” Carter said. “The developer has to weigh it as heavily as the city does to determine if it is economically sustainable.”
Carter also said he had reservations about requiring retailers who are part of the special taxing district to post a sign that makes it clear a special tax is being charged at the establishment. Carter said he believes the sign could create a negative environment, and he believes most consumers check their receipts after making purchases.
On other issues, Carter:
• Wishes more information was available about the Lowe’s proposal. Carter was on the Lawrence-Douglas County Planning Commission at the time the proposal was filed. He voted against an amendment to the city’s comprehensive plan that city staff members said was needed in order for the Lowe’s plan to proceed. Carter said he still agrees that changing the city’s comprehensive plan would have been a bad idea. But he says he would have liked a more in-depth analysis of whether the project could have been accommodated without the comprehensive plan change. He also wishes Lowe’s would have made a full presentation about how the store would have been designed. That perhaps would have eased some concerns of neighbors.
“I don’t know if I would change my vote, but I would like to have all the information.”
• Wants the city to partner more with the Lawrence Chamber of Commerce to promote a buy-local campaign.
• Said he would be “hesitant” to turn down projects based on concerns that the retail market is overbuilt.
Dever, the owner of a Lawrence-based environmental consulting firm and the lone incumbent in the race, said he’s open to the special taxing districts if developers’ plans are strong.
“If you receive an above-average improvement on a property in exchange for the property owner being able to charge a higher rate to help pay for those, then it can make sense,” Dever said. “But whether it makes sense at every location is something you are going to have to look at on a case-by-case basis.”
Dever, though, said retailers who are part of the special taxing districts should be required to post signs notifying consumers of the tax.
On other issues, Dever:
• Explained that he voted against the Lowe’s proposal because he thought it “strayed too far” from the plan that had been approved for the area. He said that plan was a key part of a compromise that allowed a Walmart to be built at Sixth Street and Wakarusa Drive.
• Believes addressing the city’s slow population growth is a factor in improving the city’s retail scene. He said many retailers consider 100,000 people to be an important benchmark in evaluating the potential of a retail market.
• Said he does not believe the city’s retail market is overbuilt. “I believe there are services that don’t exist in Lawrence that a city of our size could support.”
Machell, a human resources manager for an Overland Park pharmaceutical company, said he’s “somewhat guarded” about the use of special taxing districts. He said they likely would be better to complete development in the city than develop on the edge of town.
“They can be effective if used wisely, but I think they need to be used very judiciously,” Machell said. “If we use them too broadly we create a crazy quilt of sales tax districts that could give us a reputation of a high sales tax community.”
Machell said he didn’t have a strong opinion on whether signs should be required for retailers who are in the district. But he said he would consider the idea.
On other issues, Machell:
• Called the City Commission’s decision on Lowe’s “painful,” but understandable. He said the city was put in a tough position because the city had given assurances to neighbors during the Walmart debate that the site wouldn’t be used for big-box retail.
• Believes it is critical to better communicate to commuters the importance of buying local.
• Thinks the city was too complacent in its efforts to counter the competition created by The Legends and other shopping areas built in Wyandotte County.
“You remember when Ross Perot talked about that sucking sound and NAFTA?” Machell asked. “Well, that sucking sound we’ve been hearing lately are sales tax dollars going to Wyandotte County.”
Schumm, a downtown restaurant owner and former city commissioner, has been an opponent of the special sales tax districts.
“I don’t like them, I don’t like them,” Schumm said. “I can’t say I will never, ever support one, but it would be close to that. I think it is a sneaky tax.”
Schumm said he thinks the taxing districts create a “very unfair” business advantage because some of the tax dollars can be used to pay for ordinary operating expenses. He said he supports signs for any retailer in a special taxing district and believes signs retroactively should be required for the two special taxing districts that already exist in the city.
“My whole mode of operation at City Hall is complete transparency, period,” Schumm said.
On other issues, Schumm:
• Said Lowe’s proposal was too far outside of what neighbors had been told would happen on the property. But he said the vacant land just west of Walmart might be an appropriate location for Lowe’s.
• Wants to consider the idea of a retail incubator where unique, start-up retailers could receive a small rent subsidy from the city for up to two years.
• Believes the City Commission does need to ensure that the city doesn’t become overbuilt in the retail market, or else it can lead to unattractive areas of town.