After years of stellar sales tax growth, Lawrence retail sales start off more slowly in 2018
Thus far in 2018, Lawrence’s sales tax collections have been a bit like eating a Caesar salad — get ready for some gut churning. (I had a sixth sense about the Romaine lettuce scare, which is why I eliminated all greens from my diet except Shamrock shakes.)
It is not that Lawrence’s sales tax collections have been all bad. Instead, they’ve been up and down, which has made it difficult to predict what’s ahead for the local economy. Look at the roller coaster nature of the first four months of sales tax collections:
January: up 4.1 percent
February: down 4.4 percent
March: up 9.8 percent
April : down 4.3 percent
The end result is that Lawrence’s sales tax collections are up by just 0.9 percent for the year. Looking at results from elsewhere, it appears collections are uneven all over. Statewide, local sales tax collections are up 5.3 percent compared with the same time period a year ago, according to the Kansas Department of Revenue’s latest report. In that regard, Lawrence is a major laggard. But, it seems a lot of those increases are in smaller communities that have struggled in recent years and are having a bit of a bounce back.
For the past couple of years, Lawrence has had some of the stronger sales tax growth numbers of any of the major retail centers in the state. Thus far in 2018, that’s not the case. At the moment, Johnson County communities and Kansas City are faring better than many other parts of the state. Here’s a look at year-to-date sales tax collections compared with the same period a year ago for several of the state’s larger retail markets:
• Lenexa: up 18.7 percent
• Overland Park: up 6.0 percent
• Saline County (Salina): up 2.8 percent
• Kansas City, Kan.: up 2.7 percent
• Shawnee: up 2.1 percent
• Olathe: up 1.9 percent
• Lawrence: up 0.9 percent
• Topeka: up 0.9 percent
• Sedgwick County (Wichita): up 0.6 percent
• Riley County (Manhattan): down 0.2 percent
Not keeping up with the Johnson County communities is one thing. (I always feel better when I realize they don’t keep up with us in the categories of Ramen noodle purchases and honking for hemp.) But what is a bigger concern is whether our sales tax collections meet the projections that are in the city’s 2018 budget. Right now the 0.9 percent growth rate for 2018 is quite a bit below the approximately 2 percent growth rate the city is counting on for 2018.
If those numbers don’t improve, it could put pressure on commissioners to make some mid- or late-year adjustments in spending. Even before that, though, commissioners may feel pressure as part of their 2019 budget process, which will kick into high gear soon. City officials will look to 2018 sales tax collections to figure out how optimistic they should be about 2019 sales tax projections. The sales tax projections are really a key element to the budget. If city officials can feasibly see good sales tax growth for the coming year, it takes pressure off the city’s property tax mill levy. If sales tax growth doesn’t look feasible, then watch out for property tax increases.