Editorial: Understanding sales tax growth

The city would do well to examine what financial impact Menards has had on the community.

It was good news to learn recently that of all the major retail markets in Kansas, Lawrence had the best growth in sales tax collections.

It would be better news if Lawrence officials had any idea why such growth happened, and, more importantly, how they could continue such momentum for years to come.

Lawrence sales tax collections grew by 5.5 percent in 2016. That was better than the 3.6 growth rate of Olathe, which was the next fastest-growing community.

There could be a variety of reasons sales in Lawrence increased at such a satisfying pace. Perhaps it is a sign of increased visitor spending fueled by Rock Chalk Park and other attractions. Maybe it is pent-up demand from consumers as the economy continues to rebound.

But there is another possibility that deserves investigation: We allowed Menards to build in our community, and the shoppers came. The monthly figures from the state show that sales tax collections on building materials sold in Lawrence were up 24 percent compared with 2015 totals. This happened in the year Menards opened its new megastore near 31st and Iowa streets.

Coincidence? Perhaps, but more likely the increase is exactly as it looks. The city allowed a new retail development, and residents who previously were leaving Lawrence to do some of their home improvement shopping now stay in town. It is possible that some out-of-town shoppers — think places like Ottawa and De Soto — now make a trip to Lawrence to shop at the new store.

The city should figure out if that is indeed what happened. If so, they ought to brand the finding into their brains and recall it the next time opponents argue against a new shopping center proposal on the grounds that “Lawrence retail is overbuilt.”

That was one of the supposed reasons that city commissioners rejected a shopping center development south of the South Lawrence Trafficway and Iowa Street. It was proposed to have an Academy Sports, an Old Navy, a Designer Shoe Warehouse, among others. It was maddening to hear the number of times opponents of that project said there was nothing unique about such a shopping district, and thus you couldn’t expect people from Kansas City to drive here for stores that already exist in Kansas City.

Such logic seems to ignore that keeping retail dollars from leaving Lawrence is valuable too. The proposed developers of that project cited a study that found approximately 40 percent of every dollar Lawrence residents spend on fashion and home furnishings is spent outside of Lawrence. Isn’t anyone on the City Commission curious if that number is accurate? Isn’t anyone curious how much money Lawrence may be leaving on the table?

Maybe boring sales tax figures don’t spark such curiosity. Here’s betting another set of figures will: In a few months, city commissioners will receive revenue projections to build the city’s 2018 budget. If history is a good guide, commissioners will be plenty curious about why they never have enough money.