LJWorld.com weblogs Town Talk
Lawrence retail sales still up for the year, but latest report raises questions of a slowdown
You’ll have to decide whether you are in a glass-half-full or a glass-half-empty mood today. A new report from Lawrence City Hall on the city’s retail marketplace could leave you feeling either way.
First, the good news: Retail sales are still tracking above 2012 totals. Retail sales tax collections are up nearly 1.7 percent compared to the same time last year.
This month’s report tracks sales made through mid-May. Through that time period, taxable sales in the city have totaled about $677 million, up from about $666 million during the same time in 2012.
That’s good news, especially given that 2012 was a stellar year. Retail sales totals in 2012 grew by more than 5 percent, which was the largest percentage gain since 1998. So, the fact that retail sales are going above and beyond those totals is significant.
As for the glass-half-empty part, the report does have some numbers that likely will catch the eyes of City Hall budget makers. Sales tax collections for the latest collection period, mid-April to mid-May, were down by about 2 percent. A one-month decline isn’t cause for much concern, but this is the second month in a row that retail sales have declined. That makes next month’s report one to watch because three consecutive months of declines could be considered a trend.
The larger issue, though, is the city is now at the halfway point for its sales tax collections in 2013. (In case you are wondering, the city receives a check from the state once per month, and it recently received its June check. Because of lag time in collections, the June check only represents sales made through late May. Now you can amaze your friends at parties this weekend with the inner workings of the state’s sales tax collection system.) At the halfway point, sales tax collections are running below the city’s budget projections.
Thus far, collections are only down by about 0.2 percent compared to the budget. One good month will wipe out that shortfall. But the question, of course, is whether something has changed in the economy that will cause good months to be fewer and farther in between. The city is now projecting one scenario where sales tax collections would come in about 1 percent under budget, which would create about a $260,000 shortfall in the city’s budget.
It also would get the city’s 2014 budget started off on a bad foot. City Manager David Corliss’ 2014 recommended budget, which was released yesterday, projects sales tax revenues to grow by 2 percent over the amount the city budgeted to collect in 2013. So, if the 2013 collections come in less than budgeted, then sales tax collections in 2014 will have to grow by even more than 2 percent to meet budget.
None of this is new. Projecting sales tax collections is always a difficult part of the budget process. And if it makes you feel any better, cities all over the state are struggling with the issue too. Retail sales numbers are all over the board. Here’s a look at some of the larger retail markets in the state:
• Emporia: up 2 percent
• Hays: Down 3.1 percent
• Kansas City: Up 5.2 percent
• Manhattan: Down 3 percent
• Ottawa: Up 5.1 percent
• Overland Park: Up 2.2 percent
• Olathe: Up 2 percent
• Shawnee: Up 4 percent
• Topeka: no change from the prior year
So, what does all this mean? Is the glass half full or half empty? I don’t know. But, of course, I have a certain policy about glasses, a certain beverage and this heat. I take no chances. I keep a glass in each hand — one half full and the other half empty.