New fabric and craft retailer opens in south Lawrence; sales taxes continue to surge, while questions persist about SLT shopping center
Nothing says fall like pumpkin spice and a head-to-toe wardrobe of fleece. There is obviously no shortage of pumpkin spice, as intravenous drip bags of it are now available on every corner. But I do have news on the fleece front. A national chain fabric and craft retailer has opened along south Iowa Street.
Jo-Ann Fabric and Craft Store has opened its Lawrence location in the shopping center at 27th and Iowa streets. The store officially opened at 9 a.m. Thursday with a ribbon-cutting and several giveaways. Apparently there are people who love fleece even more than I do (or perhaps they thought there was a pumpkin spice giveaway) because there was a line outside the store of several dozen people about a half-hour before opening.
Whatever the case was, the competition level in the fabric and craft world has increased in Lawrence. Jo-Ann occupies the space that formerly housed Hancock Fabric, a national chain that went bankrupt. Hancock primarily was a fabric and sewing store. Jo-Ann has a full line of fabrics and sewing supplies, but also has a larger inventory of crafting items. I got to take a special pre-opening walk through the store (it may or may not have ended prematurely when I rolled in a pile of fleece). Among the categories of crafting items were scrapbooking items, food crafts like cookie cutters, holiday decoration kits, craft paints and several other categories.
The store is broader than Hancock’s but not as large as Hobby Lobby and Michaels, the two large craft and fabric superstores in town.
In addition to the numerous customer giveaways, local schools are set to get something from the store. The company plans to provide a $2,000 grant to one school in the community, according to a press release from the company.
In other news and notes from around town:
• Maybe it was pumpkin spice sales. Maybe it was fleece sales. Hold the phone, could it be sales of pumpkin spice-scented fleece? Surely not, but something continues to have retail spending in Lawrence on a hot streak.
The latest one-month report from the Kansas Department of Revenue shows Lawrence sales tax collections are up 11 percent compared with the same one-month period a year ago. The report was the October report, but that’s not really when the sales were made. Because of the delay in sales tax reporting, the sales are more likely reflective of activity in August.
The 11 percent increase is impressive; the city collected about $220,000 more in sales tax during that one month than it did the previous year. But at this point, such an increase is not all that surprising. Sales tax collections in Lawrence have been really strong for pretty much the entire year. As we have reported month after month, Lawrence has seen the most robust sales tax growth of any of the major retail markets in the state. That continues to be the case.
Year to date, Lawrence sales tax collections are up 6.1 percent compared with the same period a year ago. Thus far, Lawrence has collected about $1.2 million more in sales tax revenues than it did during the same period a year ago. Importantly, the 6 percent growth is far exceeding what the city budgeted to receive in 2016. The city budgeted for a 3.7 percent increase. If my abacus is working correctly, the city has about $470,000 more in sales tax revenues than it expected to receive, and that number could grow more before the end of the year.
Here’s a look at how Lawrence’s sales tax collections stack up to some of the other large retail centers in the state:
— Lawrence: up 6.1 percent
— Olathe: up 3.6 percent
— Topeka: up 3.4 percent
— Overland Park: up 2.5 percent
— Manhattan: up 2.3 percent
— Kansas City: up 1.7 percent
— Johnson County: up 1.6 percent
— Sedgwick County: up 1.3 percent
— Lenexa: down 3.6 percent
One of the more interesting questions in town continues to be why are sales tax collections up so much? It is a bit of a guessing game, but the city does try to analyze each month’s reports. The city hasn’t yet released its report for this most recent batch of sales tax data, but the analysis for last month’s data is available. It shows the same thing we have seen most of the year. Three areas of the economy are performing pretty well. Sales taxes collected on building materials are up 25 percent; sales taxes from retail stores are up 9 percent; and sales taxes from grocery stores and other food and beverage stores are up 6 percent.
As we have noted before, Menards — a major seller of building supplies — is a new entrant into the market. That certainly could be playing a role in the increase in that category. Evidence continues to mount that there were people leaving the community to buy building supplies and now they are keeping more of those dollars at home.
You also could argue that the addition of Dick’s Sporting Goods, Ulta Beauty, The Boot Barn and PetSmart at 27th and Iowa streets has helped boost the retail totals. But it can’t be said definitely. It could just be sales of pumpkin spice chewing gum at Wal-Mart. It could just be that Lawrence’s slightly better population growth of the last few years is paying off.
Whatever is happening, though, is eye-catching. Add that to the pending completion of the South Lawrence Trafficway — it is scheduled to open by Thanksgiving — and you can see why Lawrence may be drawing some good interest from retailers who want to be in the market.
But, for all those positives, the city also has to contend with what potential retailers must surely view as a negative: a lawsuit over potential retail development at the intersection of the South Lawrence Trafficway and U.S. Highway 59.
As we have reported, a shopping center was proposed for the site, with thoughts that it would bring everything from an Old Navy to Designer Shoe Warehouse. The property already is in the city limits. The city’s long-range growth plans label the area as being appropriate for “auto-related” commercial development. It is not entirely clear what that means, but it is different from plain old regular commercial development. A debate ensued, the project gets rejected by the City Commission, and a lawsuit is filed by the out-of-state development group. That lawsuit is still in its early stages.
The City Commission’s rejection of that project in January left a lot of uncertainty about what is the appropriate use for that very high-profile piece of property. Nearly 11 months later, none of that uncertainty has been cleared up. Once the lawsuit was filed, city officials have hardly uttered a peep about what the future of that land should be.
Think about this: The South Lawrence Trafficway project has been more than two decades in the making. Now that it is completed, we don’t know what we want to have happen at its premiere intersection.
The iron is hot, but it seems that the community is paralyzed on whether to pick up a hammer to strike it.
Let’s get in the time machine and set the dial to 2008. No, I’m not looking to relive the decision about a Mario Chalmers tribute tattoo or other such common KU National Championship celebration issues. Something else happened that year: Voters went to the polls to approve a new sales tax for infrastructure projects. Just like the tattoo, there are questions that linger from that vote.
As the headline implies, I believe there is a question about whether city commissioners are breaking a political promise about how they’re using that sales tax money and paying for street maintenance.
That question has come up from time to time, but has been renewed by the City Commission’s recent discussion of a five-year capital improvement plan. As proposed, that plan calls for the city to spend $3.14 million in 2017 for its contracted street maintenance program. It also calls for that same annual funding level for the life of the five-year plan.
What’s interesting is that in 2008 — before voters approved the 0.3 percent sales tax for infrastructure — the city approved $4.83 million in spending for contracted street maintenance.
Before we get too deep into the weeds here, a quick word about the city’s contracted street maintenance program. It is the program that seals the cracks in streets, puts a new coat of pavement on sections of streets, repairs portions of curbs and gutters and other such maintenance issues.
Engineers deem this program critical. I’ve frequently heard it is just like caring for your house. You have to do the mundane maintenance in order to avoid or delay the really big, expensive rebuilding projects. Simply put, the city is spending less money on those type of projects than what they were before voters approved millions of dollars in new sales tax funds for streets.
Here’s where we get into the weeds a little bit: Overall, the city certainly is spending more money on streets now than it did prior to the sales tax vote. It darn sure better be. The sales tax in 2015 alone provided almost $5 million for infrastructure projects.
But, as I’ve already noted, there are different types of street spending. There is spending on street maintenance and there is spending on rebuilding streets. The city has been spending more money on the high-profile street rebuilding projects — think Kasold Drive, think Iowa Street — but has been spending less on the more mundane street maintenance projects.
Does that, however, mean city commissioners are breaking a political promise? Well, some pretty specific things were said during the campaign to convince voters to approve this sales tax. I covered that campaign, and remember pretty well the environment we were in. A key talking point was that the city hadn’t spent enough money on street maintenance historically, and as a result we had lots of streets that needed to be rebuilt. We were behind the curve. The last thing politicians were telling voters is that they were going to spend less money on street maintenance.
Just to reconfirm my memory, I looked for a written statement on the subject. I went back to the documents from the City Commission’s Aug. 5, 2008, meeting, when commissioners agreed to put the sales tax issue on the ballot. There is a memo that explains how the infrastructure sales tax would be used. A reminder: It is used for more than just streets. The Burroughs Creek Trail received sales tax money, firetrucks have been purchased with it, a major drainage project in North Lawrence is being funded by the tax.
The memo explains all that, and then includes a paragraph that addresses a key point of philosophy: “Remaining funding is anticipated to provide new funds for street and storm water infrastructure which would enhance rather than supplant existing general fund, gas tax or storm water funding for these infrastructure projects.” Yes, city memo language can be a cure for insomnia. But let me translate for you: The key phrase is “enhance rather than supplant.” In other words, we are going to keep spending all that we spend today on streets, and this sales tax money will be new money that we’ll add on top of it. That sentiment was expressed many times on the campaign trail.
But that is not what is being proposed, and it is not what has happened the past few years. I’ve already told you the city’s contracted street maintenance fund is scheduled to receive $1.69 million less in funding in 2017 than it did in 2008 before the sales tax was approved.
But let’s take a look at the specifics. The street maintenance fund gets money from a variety of city sources.
— In 2017, it is proposed to get $2 million from the general fund, which is primarily property taxes. In 2008, it received at least $2.1 million in general fund dollars. (I think it is closer to $2.55 million, but the records are little difficult to understand on that point.)
— In 2017, it is proposed to receive $140,000 in storm water funds, which comes from a special fee on your utility bill. In 2008, it received $540,000 in storm water funds.
— In 2017, it is proposed to receive $200,000 in gas tax funds, which comes from a state-imposed tax on gasoline. In 2008, it received $690,000 in gas tax funds.
— In 2008, the street maintenance fund also received $850,000 from the countywide 1-cent sales tax, which is a different sales tax from the infrastructure sales tax approved by voters in 2008. As proposed for 2017, the street maintenance fund will receive no countywide sales tax dollars. Much of the countywide sales tax dollars that the city had available to it have now been committed to paying for Rock Chalk Park.
It is important to note that the city is proposing to use $800,000 in infrastructure sales tax money for the street maintenance fund. That is money that wasn’t available in 2008. But, as you can see, the city has reduced funding from other sources by an amount much greater than $800,000. Basically, for every new dollar the city has put into the fund, it has taken two old dollars out.
If you think this is something the new city manager has come up with, you are incorrect. The city started doing this well before Tom Markus arrived earlier this year. We reported last year that the 2015 contracted street maintenance budget had dropped to $2.8 million after city officials took money from the fund for other purposes.
So, are city commissioners breaking a political promise when it comes to streets? Honestly, I’m not that interested in answering the question. The answer will be subjective, and won’t have much bearing on what happens in the future. It certainly appears that street maintenance funding is different from what voters were told in 2008, but a lot of things have changed since 2008. The city has had financial issues it has had to address. The truth is, the folks who campaigned in 2008 for the sales tax had no way of promising what future city commissions would do with future budgets. That’s why when it comes to promises, there are many I would prefer rather than political ones.
What happens going forward, though, is important. City engineers say they ought to be spending about $6 million a year in contracted street maintenance to stay ahead of the curve. Whether that number is entirely accurate is probably debatable too.
But it seems there is a reasonable question to ask at City Hall these days: Is the city going to fall behind on street maintenance again? If the answer is yes, you need to answer another question: What city spending are you going to cut, or what taxes are you going to raise?
Don’t ask me. I think it may be easier to figure out the tattoo.
The things I’ll do for this job. Last night, I bought a six-pack of beer in the name of journalism.
Before the folks from accounting come and revoke my expense account, let me explain. The idea of reducing the sales tax charged on groceries has been brought up recently in the Kansas Legislature, but as has been the case every other time the idea has been raised, it has gone nowhere. Kansas has the second highest sales tax on groceries in the country, and that has created an interesting situation: Most Kansas consumers pay less tax for liquor than they do for groceries.
Here’s how that works: When you go to a liquor store in Kansas, you don’t pay a sales tax at all. You pay a special tax called a “liquor enforcement tax.” It is an 8 percent tax. Every liquor store in the state charges it, regardless of its location. No local sales taxes are added to the price of your liquor purchase in a liquor store. In the name of good journalism, I went to the liquor store at 23rd and Harper last night and bought a six-pack of Miller High Life. The purchase price before tax was $4.69 — and I’ll remind the accountants that wasn’t for swill but rather was for The Champagne of Beers. I paid 38 cents in tax. That’s 8 percent.
But if I were to go to a Lawrence grocery store and buy a loaf of bread, or a bag of chips or this foreign substance that my wife keeps talking about called lettuce, I would pay 9.05 percent in sales tax. As I have been known to say before, it pays to buy beer over bread.
This situation isn’t exactly new. The 8 percent liquor enforcement tax has been around for a long time. But it hasn’t been increased since 1983. That’s not the case with state and local sales taxes. In 1983 and for many years afterwards, the 8 percent liquor enforcement tax was consistently higher than the sales tax rate in pretty much every community in the state. But now there are more than 300 jurisdictions in Kansas that have sales tax rates greater than 8 percent. In more densely populated areas, it is by far the norm.
Kansas has 23 cities with a population of 20,000 or more. Of those, 21 cities have sales tax rates greater than 8 percent. Only Wichita and Derby fall at or below the 8 percent mark. The median in Kansas’ largest cities, in case you are wondering, is 9.1 percent.
What does all this mean? That is probably for you to decide. Some may see this as the state sending an odd values message by taxing something that is clearly a luxury — liquor — at a rate that is lower than something that is clearly a necessity, like food. Others may believe the problem isn’t with the liquor tax but rather believe the culprit is general sales taxes have increased too much over the years.
That’s not for me to say. But as the state searches its couch cushions for money, and as communities continue to deal with some issues related to liquor consumption, it seems like it is a conversation worth having.
If such a conversation were to happen — and let me be clear that I’ve seen no signs that it will — cities and counties probably would like to have the conversation broadened a bit. There’s also one other important difference between the liquor enforcement tax and normal sales taxes. The state keeps all the liquor enforcement tax. Cities get none of those tax collections. In Lawrence, this is big business. In fiscal year 2015, there was just less than $50 million in liquor sales in Douglas County, according to state reports. The state collected $3.99 million in liquor enforcement tax revenue. (If $50 million sounds like a lot, remember that bars also pay the tax. If a bar buys its liquor from a liquor store it pays the 8 percent tax or it also pays the tax if it buys it directly from a distributor. Also, don’t confuse this tax with the 10 percent drink tax when you order a cocktail at a bar. That’s a separate tax, so consumers do pay quite a few taxes when they are ordering liquor by the drink.)
If Lawrence and Douglas County were allowed to charge their local sales taxes on those liquor sales, that would result in nearly $1.3 million in additional sales tax revenue for the city and the county. I’ve covered City Hall long enough to know that the fact the city gets shut out of those tax revenues is irksome.
But even if the state doesn’t want to let cities and counties get in on the action, an increase in the liquor enforcement tax rate could produce significant revenue for state coffers. According to a state report for fiscal year 2015, there were $823.3 million in liquor sales subject to the liquor enforcement tax. If the state decided that it wanted to return to the philosophy of old — where the liquor tax was significantly higher than the general sales tax — it could increase the liquor enforcement tax to 12 percent. That increase would produce about $33 million in new dollars for the state, assuming liquor sales held steady.
It also would net state legislators a lot of political pain. The liquor lobby almost certainly would fight such a change. They would argue that liquor is already taxed at many different levels, and is more heavily taxed than most products, when you consider all the taxes paid from the beginning of production to the end cycle. I’m not here to debate that, and again, I’m not here to say what the right course is.
But I do think it is worth noting that at one point Kansans would go to a liquor store and pay quite a bit higher tax rate for their six-pack of beer than they would for their loaf of bread. For many Kansans, that is no longer the case.
Why is that?
Beats me, and the weekend is coming, so I’m not going to ponder it too long. I tell you one other thing I won’t ponder much this weekend: the debate between beer or bread.
The up and down trend of retail spending in Lawrence is continuing.
The latest sales tax report out of Lawrence City Hall shows retail spending for the period of mid-August to mid-September, about the time students returned to campus, was down about 1.6 percent compared to the same period a year ago.
The decline comes after a whopping 17 percent increase in the previous month's reporting period. The city has received 10 of its 12 sales tax checks from the state this year, and thus far retail sales have been up in five of those months and they have been down in five.
The forward steps, however, have been just a little bit bigger than the backwards steps. Through the first 10 reporting periods, retail spending is up about 2.5 percent compared to the same period a year ago.
The bottom-line is that retail sales in the city are still growing but not nearly at the rate they were in 2012. At this time in 2012, sales tax collections were up 6.1 percent compared to 2011 totals.
Looking at a little bit broader picture, the large increase in 2012 came after Lawrence consumer spending hit some pretty pitiful levels in 2009 and 2010. Consumers started to ramp up in 2011, but it appears that 2012 is when consumers unleashed their pent up demand. That period of pent-up demand, it appears, is now over. Once you adjust for inflation, consumer spending in Lawrence is up only about 0.6 percent for the year. This year's sales tax collections are on track to meet the city's budget estimates, but if this moderation continues, it will make 2014 an interesting year to watch.
It also is interesting to watch what is going on in other major retail markets in the state. Lawrence is faring slightly poorer than many of the major retail areas in the state, with a few notable exceptions. Lawrence's 2.5 percent growth rate thus far in 2013 is better than Topeka at 1.6 percent; Manhattan at 1.1 percent; and far better than Hays, where something is either amiss with the reports or else a significant spending slow down has occurred. Sales tax numbers in Hays are down 9.9 percent for the year.
Here's a look at other major retail areas in the state:
• Emporia: up 3.6 percent
• Johnson County: up 4.3 percent
• Kansas City: up 5.7 percent
• Lenexa: up 6 percent
• Olathe: up 4.7 percent
• Ottawa: up 6.7 percent
• Overland Park: up 3.1 percent
• Salina: up 2.5 percent
• City of Shawnee: up 4.9 percent
• Sedgwick County: up 3.6 percent
Here's one other piece of data for you. The state periodically provides statistics on the type of consumer spending taking place in the state. The latest report shows spending by industry through the first six months of 2013. I don't have access to numbers specifically or Lawrence, but these statewide numbers may give glimpse at what sectors of the market are rising of falling locally.
Sales tax collections for sporting goods, hobby, book and music stores were the largest gainer in the retail sector, by percentage increase. Sales in that sector were up 5.2 percent during the first six months of the year. Other retail categories included:
• Vehicle and parts sales: up 4.3 percent
• Furniture and home furnishing: up 1.8 percent
• Electronics and appliance stores: down 2.8 percent
• Building material and garden supply stores: down 2.7 percent
• Grocery and food and beverage stores: up 2.8 percent
• Drug stores and personal care stores: up 3.0 percent
• Gasoline stations: down 1.9 percent
• Clothing and clothing accessories: up 3.6 percent
• General merchandise stores: up 0.8 percent
• Miscellaneous retailers: down 6.4 percent
• Restaurant and drinking establishments: up 1.7 percent
• Hotels and accommodations: up 2.1 percent
Retail sales in the city up 3 percent for the year; SLT opponents organizing “occupation” event at the wetlands
There must have been a lot of families with back-to-school shopping lists this season much like mine: pencils, erasers, notebooks, diamond earrings. (What's that? I was told it is a necessity that mothers looks stylish at PTO meetings.)
Regardless, the latest sales tax report from Lawrence City Hall shows that something caused a spike in sales during that back-to-school season. The city's September sales tax report — which actually includes sales data from the mid-July to mid-August time period — shows taxable sales in the city were up a whopping 17 percent from September 2012.
I never make too much of one month's worth of data because statistical anomalies can pop up, but the bigger picture also is looking more positive than it did for the city just a few months ago. With nine months of sales tax checks in the bank, retail sales in the city are up 3 percent from the same period a year ago.
Bottomline: Retail sales are growing at a decent clip in Lawrence, but not nearly as fast as they did in 2012. At this time last year, retail sales were up 6 percent. But I can tell you that City Hall officials who rely on sales tax collections for a big part of their budgets are breathing a little easier now. At the midway point of 2013, retail sales were up just 1.7 percent for the year, and it was uncertain whether the city's sales tax collection would meet budget for the year.
It appears more likely that the city will make its budget at this point. With just three more checks to collect in 2013, collections in the city's largest sales tax fund are about 1 percent over budget projections. So, the fourth quarter still will be key, but City Hall budget-makers feel better about their chances than they did a few months ago.
As for how Lawrence stacks up with other cities, it is a mixed bag. The data indicates Lawrence's retail sales growth may be a little bit behind the statewide average. For all jurisdictions that collect a local sales tax, the average growth rate thus far for 2013 has been 3.7 percent compared to 3.0 percent for Lawrence. Here's a look at how some of the larger retail markets in the state have fared year-to-date:
• Emporia: up 3.6 percent
• Hays: down 8.3 percent
• Kansas City: up 5.7 percent
• Manhattan: down 0.1 percent
• Olathe: up 4.5 percent
• Overland Park: up 3.2 percent
• Salina: up 2.9 percent
• Shawnee: up 5.1 percent
• Topeka: up 1.7 percent
Here's a look at some of the smaller markets around Lawrence. The sales totals in these communities are much smaller, so wilder swings are possible. But with nine months in the books, most are having a strong year:
• Baldwin City: up 1.4 percent
• Basehor: up 16 percent
• Eudora: up 14.2 percent
• Ottawa: up 6.9 percent
• Tonganoxie: up 10.0 percent
And finally, here's a look at how Lawrence's retail sales totals year-to-date compare to the same period in past years, and how they have been growing once adjusted for inflation. The number in parenthesis is the inflation-adjusted total for the year:
2013: $1.03 billion 2012: $1.00 billion ($1.02B) 2011: $947.9 million ($985.5M) 2010: $916.5 million ($983.0M) 2009: $930.7 million ($1.01B) 2008: $966.2 million ($1.04B)
So, once adjusted for inflation, Lawrence's retail sales are up about 1 percent for the year, and we're still lagging behind where we were before the economic downturn that hit in late 2008. But don't worry, we'll catch up. I think there is another PTO meeting coming up.
In other news and notes from around town:
• From PTO to WPO — the Wetlands Preservation Organization. As I've been telling you, get ready for some protests out at the Baker Wetlands as roadwork on the South Lawrence Trafficway likely will begin in the wetlands next month. Well, the WPO — which includes a lot of students from Haskell Indian Nations University — is beginning to show its hand in that regard. The organization's Facebook page is advertising an "Occupy the Wakarusa Wetlands" event on Oct. 25 and Oct. 26. According to a flier on the site, the group is encouraging people to camp at the wetlands and "help us protest this atrocity." The website also says the group is trying to "organize resistance and awareness in any way possible," and it even makes reference to the large protests that have gripped the Arab world. "There is an Indian Summer coming this fall," an organizer wrote on the page. "It looks a lot like an Arab Spring."
It will be interesting to watch the changing of the seasons at the wetlands in the coming weeks.
• In the category of notable commercial sales: It looks like one of Lawrence's more renowned music venues has taken a step to secure its future in downtown Lawrence. According to a filing at the Douglas County Register of Deeds, a company led by Brett Mosiman, owner of The Bottleneck, has purchased the building at 737 New Hampshire, which houses the The Bottleneck. The building was owned by a trust in the name of longtime Lawrence attorney Lance Burr.