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City sales tax collections continue to grow, but at slower pace than past years

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The plan to grow the city’s sales tax coffers by filling Memorial Stadium had a bit of a setback this weekend. Regardless, the latest report shows the city’s sales tax collections are still growing, although not as rapidly as in past years.

Plus, I still think something positive will come out of last weekend’s game. If you were like me and watched it on the Jayhawk Television Network, you saw approximately 200 ads for a miraculous device called the Brownie Bonanza, and I ordered approximately that many of them. That ought to cause something to grow.

In actuality, the latest sales tax report is for the city’s August collections, so spending from KU football fans isn’t yet showing up. The large amount of spending the city saw as a result of the Junior Olympics in late July also isn’t reflected in these numbers. Though the state calls this its August sales tax report, there is a delay in the time it takes for retailers to collect sales taxes and send them into the state. So, the figures in the August report really are more indicative of sales that happened in June or thereabouts.

For the month, Lawrence sales tax collections were up by 0.3 percent, which is kind of a ho-hum performance. One-month totals, though, don’t mean a whole lot. They vary widely from month-to-month. Year-to-date numbers show a better trend. Through August, Lawrence sales tax collections are up 2.7 percent compared to the same period a year ago. That is still one of the better growth rates in the state, but it is not as good as last year’s performance, when sales tax collections grew by about 5.5 percent.

For much of last year, Lawrence sales tax collections were the fastest growing of any of the large retail markets in the state. The fact that the growth has slowed down lends some credence to the theory that Lawrence saw a large uptick in 2016 thanks to the addition of some major retailers, especially Menards. But Menards has now been open for more than a year, so its numbers are already baked into the system, so to speak. (Sorry for the phrasing. I’ve still got Brownie Bonanza on my mind.) Are there other retailers out there that would add significant amounts of money to local sales tax collections, if they were to locate in Lawrence? Are some of them part of the proposal for a shopping center south of the South Lawrence Trafficway and Iowa Street intersection? I don’t know. City Hall officials, though, should work to figure it out, given the importance of sales tax collections to the city’s budget.

Lawrence City Hall, 6 E. Sixth St., Thursday, July 7, 2016

Lawrence City Hall, 6 E. Sixth St., Thursday, July 7, 2016 by Mike Yoder

Here’s a look at how Lawrence’s year-to-date sales tax growth compares to other major retail areas in the state:

— Lenexa: up 7.8 percent

— Shawnee: up 4.3 percent

— Lawrence: up 2.7 percent

— Olathe: up 2.7 percent

— Topeka: up 0.9 percent

— Overland Park: up 0.7 percent

— Saline County (Salina): down 0.1 percent

— Sedgwick County (Wichita): down 0.3 percent

— Kansas City, Kan.: down 1.1 percent

— Riley County (Manhattan): down 2.3 percent


• When it comes to sales taxes, there is one other figure worth tracking these days: The sales tax surplus at City Hall. While sales tax collections aren’t growing as fast as they did in 2016, they still are on pace to come in well above budget.

Estimating future sales tax collections is difficult (predicting the future tends be that way.) As a result, the city ended up being pretty conservative in terms of budgeting for 2017 sales tax revenues. It budgeted to collect about $23.8 million in city sales taxes. (It also gets a large portion of the countywide sales tax, but that’s not included in these numbers.) If the city’s sales tax collections stay on their current pace — i.e. finish the year 2.7 percent higher than last year — the city will collect about $25.4 million in city sales taxes.

That will result in about a $1.5 million surplus, or in other words, about $1.5 million that the city will receive but has not budgeted to spend in 2017. That would continue a trend. I previously did some math and estimated that from 2012 to 2016 that the city has collected at least $3.5 million more in sales and use taxes than what it budgeted to collect. If you were to add in the city’s share of the countywide sales tax, the number likely would be even higher.

That unexpected money, though, hasn’t been enough to prevent increases in the city’s property tax rate. From 2012 to 2017, the city’s property tax rate has increased from 29.5 mills to 33.2 mills.

One of the reasons the extra sales tax money hasn’t been enough to prevent property tax increases is because the city also is spending more than expected. As we reported in July, spending in the 2017 budget is expected to come in about $4 million above budget.


• In other news and notes from around town, today is Sept. 11. It has been 16 years since the terrorist attacks. On this day, I re-read an article that I wrote back in 2011. It is about a small Kansas town and the connection it made with a group of New York City firefighters who responded to the terrorist attacks there. It reminds me of our ability to connect and to be kind. If you would like to read it, click here.

Comments

Brett McCabe 3 months ago

Simply collecting more sales tax revenues doesn't justify expanding the city, the infrastructure, etc., especially when there is a good chance that the retailers entering the market won't even be here in ten years.

Chad continues to beat a dead horse. It's also interesting how he skips over the increases in sales tax from the redeveloped building where Dick's sits. Don't let the facts get in the way of strong opinion, right Chad?

We need more sales tax revenue, for sure. We need more property tax revenue, for sure. And we can get both in much wiser and more cost-effective ways than by dropping another dum-dum North Carolina strip mall on the edge of town.

Some cities actually encourage smart growth. South Iowa doesn't have to look like the midway at the state fair in order for us to gain retailers. There are other options.

Chad Lawhorn 3 months ago

Hi Brett: Just to set the record straight, I’ve mentioned the impact the Dick’s Sporting Goods development has had on sales taxes many times. Here are a couple I found in about two minutes searching. There are others as well. Menards gets mentioned more only because it is the most recent one, and thus has been having a proportionally greater impact on the total. That will begin to change as it now enters its second year of operating in Lawrence. http://www2.ljworld.com/weblogs/town_talk/2017/jan/11/lawrence-finishes-year-with-best-sales-t/ http://www2.ljworld.com/weblogs/town_talk/2015/apr/9/sales-tax-collections-on-the-rise-in-ear/ Thanks, Chad

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