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Posts tagged with Sales Tax Collections

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.

Reply 3 comments from Frankie8 David Holroyd

Lawrence’s retail sales up 2.1 percent for first quarter

In case you had forgotten, today — April 15 — is tax day. But I hear that a high-ranking federal official will be in town on Friday, so perhaps you could save yourself some postage and just ask him to take it back to D.C. with him.

Let me know how that goes.

In the meantime, let’s talk taxes of a different type. The city of Lawrence now has received sales tax revenue through the first quarter of 2013, and the city’s retail sales totals are showing growth over and above what was a robust 2012.

Through the March report, the city has tallied $354.1 million in retail sales, up 2.1 percent from the same period a year ago. In case you are scoring along at home, these totals don’t represent sales actually made from January through March. The state’s reporting system has a lag, so these totals represent sales made in late 2012 up to about mid-February.

If you are looking for a reason to be negative ( and why wouldn’t you, it is tax day), the city’s March numbers are down about 1.2 percent from March 2012 numbers. But worrying about one month’s worth of sales tax numbers would be like me worrying about my wife buying $150 worth of leftover Easter candy. It's just something that happens in life.

If you are really looking for a reason to be negative (geez, how much do you owe the federal government?), you also could point to the fact that the city’s sales tax collections are growing more slowly than they did a year ago. But that may just be you being a grump because the city posted a blistering growth rate of 5.24 percent in 2012, which was the city’s best retail growth since 1998. Over the past five years, the average growth rate of retail sales in Lawrence has checked in at 1.8 percent. So, the first quarter was about average.

Compared to other places in the state, Lawrence’s performance in the first quarter was mixed. Statewide, retail sales grew by 3.7 percent. Here’s a look at some of the larger retail markets in the state:

• Overland Park: up 1.2 percent

• Olathe: up 4.9 percent

• Kansas City: up. 6.3 percent

• Topeka: up 1.3 percent

• Emporia: up 3.5 percent

• Salina: up 1.7 percent

• Hays: up 5.0 percent

• Manhattan: down 4.0 percent

(Look what happens when your football team goes to a bowl game. Everybody leaves town and spends their money somewhere else. I knew KU football knew what it was doing all along.)

A little closer to home, here’s a look at totals for some smaller communities around Lawrence. But take these figures with a grain of salt. The totals are often so small that it takes only a few dollars to produce a sizable change.

• Baldwin City: up 5.5 percent

• De Soto: down 5.9 percent

• Ottawa: up 7.7 percent

• Tonganoxie: up 8.1 percent

• Eudora: up 16 percent. I actually did the math on that one, and the increase represented an extra $1 million in retail spending during the first quarter. Eudora has been running an aggressive “buy local” campaign, with signs everywhere in town. So maybe that it is it, or perhaps my wife simply found a leftover Easter egg candy outlet in Eudora.

And finally, it wouldn’t be a sales tax article unless I got out my inflation calculator. (You should see the size of that thing.) Here’s a look at Lawrence’s retail sales totals since 2008 — just prior to the financial crisis. The numbers in parentheses are the total adjusted for inflation, in order to give you an idea of how much retail sales have grown above and beyond inflation.

• 2013: $354.1 million

• 2012: $346.6 million ($350.4 million)

• 2011: $333.2 million ($343.9 million)

• 2010: $309.1 million ($329.1 million)

• 2009: $327.9 million ($354.8 million)

• 2008: $334.7 million ($360.9 million)

So, we haven’t quite rebounded back to the levels seen prior to the financial crisis, but we’re very close. And we clearly have bounced backed from the lows of 2010.

If you want more analysis than that, you are going to have to do it on your own. I’ve got breakfast to eat — Cadbury eggs and chocolate bunnies, of course.

Reply 14 comments from Jafs Bigal David Holroyd Ibroke Chootspa Gotland Merrill Appleaday Tolawdjk Lawrenceguy40 and 3 others