It was an interesting experience Tuesday night covering the Lawrence City Commission, seeing firsthand how the politics and policies of state and local government intersect.

The big news in local government this time of year is putting together their budgets for the upcoming year. And much of what they’re confronted with this year is a direct result of legislation passed at the Statehouse.

For local governments, there are two overriding issues driving their decisions on budgets and whether to raise local property taxes: a state mandate for them to contribute more toward their employees’ retirement funds; and a looming property tax lid that, beginning in 2018, will generally prevent them from increasing property tax revenue beyond the rate of inflation.

In many cases, those two mandates are at odds with one another. In Lawrence, city officials say it’s impossible to keep up with the rising cost of government — which they say includes offering competitive wages to their employees — without additional revenue. Elected commissioners, for their part, say they want to look for other solutions like tapping into special revenue funds or spending down reserves.

Over the long haul, however, the only other significant source of revenue cities and counties have is the local sales tax. So the big question is whether they can depend on growth in retail sales in their communities to fill in the gaps that can’t be filled with property taxes.

And that’s where state politics comes in. Because in Topeka, Republican Gov. Sam Brownback and the GOP-led Legislature have made a policy choice to slash income taxes, with an eye toward eliminating them altogether in the future, and to shift the state’s reliance onto “consumption” taxes like retail sales, alcohol and tobacco. This year, they raised the state sales tax rate to 6.5 percent and added 50 cents a pack onto the cost of cigarettes.

Much of this is based on the economic theories of Arthur Laffer, the Reagan-era economist made famous for his theory known as the Laffer Curve. It basically says that in setting tax rates, particularly on income tax, there is a point of diminishing returns, where increasing the rates actually produces less revenue.

On paper, it looks simple. A zero percent tax rate would produce zero revenue. But so too would a 100 percent tax rate because there would no longer be an incentive to work for income if 100 percent of the income would be taken in taxes. At some point between zero and 100 percent, there is a “tipping point” of sorts that makes raising tax rates counterproductive.

This is the theory behind the idea now popular in Topeka that says cutting, or even eliminating, income taxes will spur economic growth. Because taxing income is a tax on productivity, and the more you tax it, the less of it you’ll get.

The burning question now lurking in the back of people’s minds at city halls and county courthouses across Kansas is whether the state, by shifting its own revenue flow away from income taxes, has now broached the Laffer Curve tipping point on sales taxes.

In parts of Lawrence, where consumers pay sales tax to the state, city, county and a special transportation development district, the combined sales tax rate is now just over 10 percent. The worry in some corners is that the combined rate may now be high enough that it will actually suppress consumer spending, or at least drive that spending toward some neighboring community where the tax rate is lower.

When it comes to groceries and eating out, economists say, consumers have a way of absorbing higher costs — eating chicken instead of beef; buying generic products instead of name brands; or hitting the drive-thru window instead of a sit-down restaurant — to keep their total food expenses in line.

But when it comes to big-ticket purchases like new furniture or appliances, computers, or even back-to-school shopping, consumers can easily be lured a few miles — or counties, or a state line — away if the savings can justify the travel expense.

Bryan Kidney, the city’s finance director, said Tuesday that the proposed budget for next year is built on an assumption of 3 percent growth in sales tax revenues next year. But that estimate was made before the Legislature raised the state rate. He’s not yet convinced that the higher sales tax rate will suppress consumer spending. He’s never seen it happen yet, but says it’s worth keeping an eye on.

But some on the City Commission, including Mayor Jeremy Farmer, say they are less sanguine about the prospects. “We don’t know the answer to those questions. There’s a lot of things that could negatively impact us,” he said Tuesday night.

Interim city manager Diane Stoddard reported Tuesday that sales tax receipts from mid-February through mid-March were down about $33,000 from the same period last year, a reflection of lower-than-expected retail activity nationwide during that time. Key indicators of how the state’s higher sales tax rate is affecting cities and counties will come later this year, during the back-to-school shopping season later this summer, and the holiday shopping season in November and December.