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.
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.
The latest report is out, and Lawrence sales tax collections continue to be good — but not good enough in one key regard. They aren’t good enough to avoid a property tax increase from City Hall.
The city recently got its July sales tax check from the Kansas Department of Revenue. It showed it collected 2.8 percent more in sales tax revenue than it did during the same period a year ago. Monthly totals vary wildly, so the more important figure is the year-to-date calculation. Through the first seven months of 2017, the city has collected 3 percent more in sales tax revenue than during the first seven months of 2016.
That’s not bad. It is about twice the rate of inflation. But, it is not as good as it has been in past years. Sales tax collections in 2016 grew by 5.5 percent. The slowdown comes at an inopportune time for Lawrence taxpayers. In a roundabout way, it is one of the reasons Lawrence taxpayers are set to see a 1.25 mill increase for the 2018 budget.
Here’s the quick version of the city’s proposed 2018 budget: In May city staff recommended a budget with a 1.25 mill levy increase to help pay for a new police headquarters building. The city built the budget with the idea that sales taxes would grow by 4 percent but property values would only grow by 2 percent. In June, the city got word from the county that the city’s property tax base actually grew by 6 percent. That meant if the city made no other changes to its budget, it would get an extra $1.4 million in property tax revenues that it wasn’t expecting.
In the past, this may have been good news for taxpayers. City officials would take some of that $1.4 million in unexpected revenue and use it to reduce the 1.25 mill levy increase. Here’s an example of what happened this year. Of the $1.4 million total, about $948,000 of it goes into the city’s general operating fund. The city took a second look at its proposed budget for the general operating fund and decided that some other revenues projections needed to be adjusted downward by $485,000. On the expense side, it decided some projections needed to be adjusted upward by $485,000. The result: That $948,000 in unexpected revenue is all gone, and then some.
But back to the sales tax issue. The biggest change the city made from May to June is it reduced its projections for sales tax collections in 2018. That one change wiped out $590,000 of the unexpected money. It probably was a reasonable change. The city was budgeting to see 4 percent sales tax growth in 2018. Sales tax collections in 2017 may not even grow 4 percent, so it would be unwise to assume they will in 2018.
But there is another sales tax number to pay attention to. How much does the city collect in sales taxes compared with how much it budgeted to collect? For years the city has consistently underestimated how much money it will collect in sales taxes. The result is the city ends up with money that it hasn’t budgeted to spend at the end of the year.
Two key questions: How much money, and where does that money go? The how much isn’t really easy to figure out. But after looking at several line items of several years worth of budgets, I’m comfortable estimating the city has collected at least $3.5 million more in sales and use tax revenues from 2012 to 2016 than what it budgeted to collect. The number is almost certain to go up in 2017. Current projections have the expected excess at a little more than $1.5 million for 2017.
Where the money goes is easier to answer. It basically goes into a series of rainy-day accounts called “fund balances.” They are basically used to cover unexpected expenses, unexpected revenue declines or calamity.
It is good to have an account like that, but it also would be good to have a discussion about whether it needs to continue to be funded by excess sales tax revenues. Sales tax revenues are tough to predict, but when the city has a sales tax prediction fall short, it often results in residents paying more in property taxes than they really need to.
But what if the city kept all of its excess sales tax collections from past years in a separate fund? It could be called the excess sales tax fund. The city would still have to make sales tax projections, but the stakes would be lower if the projections are wrong. If there is a year that taxes come in below the projection, the city pulls money out of the excess sales tax fund. If it comes in above the projections, the fund grows. It would have been helpful this year. Remember that $550,000 last-minute reduction in sales tax projections? Such a fund could cover it, if it even materializes.
As for the city’s rainy-day fund, that would still exist. The general operating fund balance has more than $15 million in it, and it can grow in ways that don’t involve excess sales tax revenues.
Certainly, flaws can be found in this type of system too. But I believe taxpayers — especially those who don’t like property taxes — are finding flaws with the current system. Sales tax collections have been really good for a lot of years in a row now, yet the property tax rate continues to rise. This year both sales tax collections and property values are up, yet the property tax is set to rise.
From 2012 to 2017, a time when sales tax collections have come in millions over budget, the city’s property tax rate has grown from 29.5 mills to 33.2 mills upon approval of this budget. Everything else being equal, that is a 12.5 percent increase in taxes, which isn’t that bad, until you look at one other statistic: incomes.
In 2012, the federal Housing and Urban Development department estimated the median family income in Douglas County at $71,500. In 2017, the estimate is $68,500.
That’s perhaps the most important number for budget-makers to keep in mind.
Lawrence sales tax collections remain strong; a look at how local shoppers are saving the city’s budget
While the Kansas Legislature continues to struggle to find a tax policy to fill a gaping budget hole (thus far the idea of using one hand to point fingers and the other to rub a magic lamp has fallen short), the city of Lawrence continues to receive good tax news. Sales tax collections remain on a roll in Lawrence.
Lawrence recently received its April sales tax check, which reflects taxes collected on sales made generally in February or late January. Whether it was big Valentine’s Day gifts, or the gifts you have to buy for forgetting Valentine’s Day, spending totals were up in Lawrence. Sales tax collections for the month grew by 5.1 percent in Lawrence, compared with the same period a year ago.
For some reason, spending in Lawrence was much better in February than it was in other major retail centers in the state. For example, Sedgwick County, Overland Park, Olathe and Topeka all saw declines in their sales tax collections for the month.
It is never wise to read too much into any one month, but the latest report continues a trend for Lawrence. The city now has received four of its 12 sales tax checks for 2017, and they have added up to a pretty positive trend. For the year, Lawrence has seen sales tax growth of 4.2 percent — or about $350,000 — compared with the same period a year ago. That puts Lawrence near the top of the pack of other large retail centers in the state. Here’s a look:
— Lenexa: up 10 percent
— Lawrence: up 4.2 percent
— Shawnee: up 4.2 percent
— Olathe: up 3.7 percent
— Topeka: up 2.9 percent
— Kansas City: up 2 percent
— Overland Park: up 1.1 percent
— Sedgwick County: up 0.4 percent
Sales tax numbers are a good indication of economic activity in a community, but they also are important to keep in mind this time of year for another reason. It is budget season at Lawrence City Hall. As we reported, City Manager Tom Markus released his recommend budget for 2018 last week. Sales taxes are a critical part of the budget.
While Lawrence’s performance this year is good, city officials are counting on it to remain good throughout the entire year. Markus’ recommended budget shows projections for how 2017 will end. The budget is projecting that 2017 sales tax revenues will come in 4 percent higher than 2016 totals. We are at 4.2 percent now, which is better than most cities in the state. Lawrence needs to keep up the pace to meet those projections.
A closer look at the budget shows just how important sales tax revenues have become to the city. It basically is the revenue source that makes up for all the other failing revenue sources. One struggling revenue source is franchise fees, which is a special tax you pay on several utility bills, such as electric, cable, telephone and gas bills. The city budgeted to collect $8.1 million in franchise fees in 2017, but city officials now project they’ll collect only $7.8 million. Licenses and permits — building permit fees are the big one in this category — were budgeted at $1.38 million for 2017. Now, they are projected to come in at $1.26 million. And then there are fines, such as the ones you pay for speeding or parking in a spot you are not supposed to. Evidently, Lawrence is becoming much better behaved in that regard. Fine revenue is really sagging. The city is budgeted to collected $3.02 million in fines in 2017 but is now projecting to collect only $2.4 million.
Just those three categories alone account for a $1.1 million budget shortfall at City Hall. Given that, you may think the city’s budget is in trouble. It is not, though. The city in 2017 budgeted to collect $72.22 million in revenues for its general operating fund. It is now projecting it will collect $72.81 million in the general fund. The city is on pace to have a nearly $600,000 budget surplus in its main operating fund.
The reason: sales taxes. The city budgeted to collect $28.5 million in general fund sales taxes in 2017. It is now projecting it will collect $29.7 million in sales taxes for the year — a $1.2 million surplus.
Lawrence shoppers are saving the city’s budget. A valid question, though, is: Could they save it even more?
As the city asks for this tax increase — and don't forget, the county may ask for one too — it will be interesting to watch whether it creates a debate about the city’s policy for allowing new retail development. An issue that continues to lurk just beneath the surface is the city’s 2016 denial of a proposed shopping center south of the South Lawrence Trafficway and U.S. Highway 59 interchange. The city is getting sued over that denial. The lawsuit is moving slowly. Whether that is a sign the two sides are trying to reach a settlement, I don’t know, but it would not surprise me given some of the chatter I have heard.
The developers commissioned a study that showed if the City Commission would have approved the shopping center in early 2016 that by 2018 the new retailers at the center would have added about $970,000 in new sales tax collections to the city’s budget. In case you are scoring at home, the 1.25 proposed mill levy increase in Markus’ budget will generate about an extra $1.1 million in property tax revenue. If the shopping center had been in place, perhaps a smaller mill levy increase would be needed. Opponents of the shopping center may not agree. It certainly is fair to note that developers' estimates don’t always come true.
What is likely to be true, though, is that by the time the city, the county and the school district get done with their budgets, there will be a fair number of people unhappy with their property tax bills.
Today may be the quintessential Lawrence day: A day where everybody takes a lunch break, and at least half the population never returns to work — thanks to either a green beverage or an orange ball. It will be a big money day in Lawrence, and a new report shows merchants have had a few of those recently.
While you may be focusing on St. Patrick, the latest sales tax report indicates Lawrence merchants may still be giddy from what St. Nick left behind. A new Kansas Department of Revenue report indicates retail sales during the Christmas shopping season were up significantly in 2016.
The city received its monthly sales tax check from the state, and the totals largely represented sales made from late November to late December. The report found that sales tax collections during that critical time period grew by 7.8 percent compared to the same period a year earlier.
It looks like shoppers in several Kansas communities opened up their wallets during the Christmas season. Sales tax collections for that one-month period from essentially Thanksgiving to Christmas were up 10 percent in both Johnson and Shawnee counties. In Wichita, the pace was a bit slower but still positive: 5.8 percent growth in Sedgwick County. The big exception was Wyandotte County, which is home to the mega Legends shopping district near the Kansas Speedway. Sales tax collections were down about 15 percent there.
While this one month period is particularly important to retailers, it is never wise to read too much into any one month’s worth of sales tax data. It is fairly easy to have reporting anomalies in a single month, but the number of communities that posted strong gains is a good indication that there was true improvement in holiday spending in the state.
State budget-makers certainly will welcome that. But city and county budget-makers probably are rooting for strong retail sales more than ever. Sales taxes are going to be more important than ever to local budgets. That’s because of the state-mandated property tax lid that will begin with 2018 city and county budgets.
As a reminder, the lid will require local governments in many instances to have a public election before using property taxes to fund new government spending. Cities and counties build their 2018 budgets this summer, and there is a real possibility that we could see elections — they would be mail-in ballots — in the late summer for both the county and city budgets.
There is discussion currently in the Kansas Legislature to alter the lid or even it repeal. So, we’re watching that and will bring you reports. But, the main point still stands: The current environment suggests sales taxes are going to be more critical than ever to growing communities.
Thus far, the news on that front has been good in Lawrence. Lawrence has now received two of the 12 sales tax checks it will receive in 2017. While that is a small sample size, the results have been encouraging and have continued the trends of strong growth we saw through 2016.
Year-to-date, Lawrence sales tax collections are up 7.3 percent compared to the same two-month period a year ago. Here’s a look at how Lawrence’s growth rate compares to some of the other large retail communities in the state.
— Lenexa: up 14.1 percent
— Topeka: up 7.4 percent
— Lawrence: up 7.3 percent
— Olathe: up 6.9 percent
— Johnson County: up 5 percent
— Sedgwick County: up 3.5 percent
— Manhattan: up 3.3 percent
— Overland Park: up 1.9 percent
— Kansas City: down 20 percent
It will be interesting to watch what happens the rest of the year with retail sales and also the attitude local leaders have about retail development. As I was writing this column this morning, I had to stop to report the breaking news that JCPenney has announced it is closing its Lawrence store. (See that article here.) That space, combined with the former Hastings space at 23rd and Iowa, does represent some fairly large vacancies along the city’s prime commercial corridor. How quickly they get tenants will be important to watch.
In the meantime, Happy St. Patrick’s Day, and enjoy your “lunch break.”
Maybe it was shoppers buying an extra large Thanksgiving turkey. Maybe it was voters buying post-election migraine medicine, or maybe it was prescient Atlanta Falcons fans buying choke collars. Whatever the case, Lawrence shoppers appeared to be big spenders during the early holiday shopping season, a new report from the state shows.
The city received its first sales tax check of 2017 from the Kansas Department of Revenue. Although the check is the city’s January distribution it actually measures sales that took place in November.
The report shows Lawrence sales tax collections were up 6.7 percent in November from the same period a year earlier. That was the best growth rate of any large retail community in the state.
The latest report continues a trend. Throughout 2016, Lawrence had the largest sales tax growth rate of any of the large retail communities in Kansas. Lawrence saw sales tax collections grow by about 5.5 percent in 2016.
This latest report only shows one month worth of activity, but it was an important month for retailers. The report captures sales made on the Black Friday shopping spree after Thanksgiving. Next month’s report will provide an indication of how sales went after Black Friday. Here’s a look at how Lawrence stacks up against other large retail communities:
— Lawrence: up 6.7 percent
— Topeka: up 4.7 percent
— Lenexa: up 3.5 percent
— Olathe: up 2.4 percent
— Manhattan: up 1 percent
— Sedgwick County: up 0.9 percent
— Johnson County: down 0.6 percent
— Overland Park: down 2.4 percent
— Kansas City: down 23.2 percent
No word on what is going on with Kansas City, Kan. Because it is just one month’s worth of data, I wouldn’t read too much into it. It could just be a reporting anomaly.
Lawrence’s numbers will be worth watching in 2017. Sales taxes are more important than ever for City Hall finances. Both the city and county are now operating under the state’s property tax lid, which means it is more difficult for those governments to raise property tax rates without holding an election. Any growth in sales tax revenues would help them avoid contemplating that type of property tax increase.
The sales tax numbers for 2016 are in, and they show Lawrence was perhaps the hottest retail market in the state — and that is before sales of the Donald Trump inauguration T-shirts and the replica Meryl Streep Golden Globe statuettes.
As we have been telling you all year, Lawrence’s monthly sales tax collections have been growing at a faster rate than any of the other major retail markets in Kansas. Well, cities across the state have received from the state their final sales tax check of 2016, and Lawrence has retained that distinction.
Lawrence finished 2016 with sales tax revenues growing by 5.5 percent, compared with 2015 totals. When you combine sales and use taxes (use taxes are the tax you pay when you buy something online and the retailer doesn’t charge you a sales tax) the city’s total collections grew by 6.4 percent. That’s not a record year, but it is close to it. Here’s a look at the growth rates from recent years and the total amount of sales and use taxes received by the city:
— 2016: up 6.4 percent to $27.3 million
— 2015: up 4.4 percent to $25.7 million
— 2014: up 5.5 percent to $24.6 million
— 2013: up 1.9 percent to $23.3 million
— 2012: up 5 percent to $22.9 million
The 2016 growth rate ended up being the best since 1998, when sales tax collections grew by a whopping 8.5 percent. (You all remember the glorious year of 1998, when we were buying Beanie Babies and our only Russian worry was whether Boris Yeltsin inadvertently would become trapped in a vodka bottle.) Those were good times for Lawrence’s retail scene. But it may surprise people that this last five-year period has been every bit as good. Even though it may not have felt as fun, Lawrence’s sales tax collections from 2011 to 2016 have grown by 23 percent. From 1997 to 2002, they grew by 21 percent.
If local governments have funding problems, they should not blame consumers or sales tax collections.
In 2016, Lawrence definitely didn’t have anything to complain about on the sales tax front. Here’s a look at how Lawrence performed compared with the other major retail communities in the state:
— Lawrence: up 5.5 percent
— Olathe: up 3.6 percent
— Topeka: up 3.3 percent
— Overland Park: up 2.7 percent
— Manhattan: up 1.8 percent
— Johnson County: up 1.8 percent
— Kansas City: up 1.7 percent
— Sedgwick County: up 1.1 percent
— Lenexa: down 2.5 percent
For what it is worth, it also appears sales tax collections strengthened as the year went along. For example, when I reported on sales tax collections in April, Lawrence had posted just a 2.9 percent increase, and Topeka, Johnson County and Overland Park all were in negative territory. All those communities saw significant growth in sales tax collections since then.
As to why Lawrence had such good sales tax numbers, 2016 was the year Menards opened its large home improvement store in south Lawrence. City reports note that sales tax collections on building materials sold in Lawrence were up 24 percent compared with 2015. Sales tax collections on vehicles and car parts sold in Lawrence were up 9 percent. And sales tax collections on grocery items were up 5 percent.
The building materials number is the most interesting. It is not definitive proof that the Menards store is causing people to keep more of their dollars in Lawrence, but that is what it suggests. If the city wants to study something else, a good topic would be how much money do Lawrence residents spend outside the city, and have developments such as Menards and Dick’s Sporting Goods helped lessen that number? You would think city commissioners would want to have that information before they decide whether to reject new shopping center developments, like the proposal south of the SLT and Iowa Street interchange, which is now the subject of a lawsuit.
• Now that we have year-end numbers, it also is interesting to look at just how much business the largest retail markets in the state did in 2016.
— Johnson County (Home to Overland Park, et al): $11.44 billion
— Sedgwick County (Home to Wichita): $9.01 billion
— Shawnee County (Home to Topeka): $2.94 billion
— Wyandotte County (Home to Kansas City): $2.59 billion
— Douglas County: $1.71 billion
— Manhattan (Manhattan is in two counties so I used the city totals instead of trying to combine the two county totals): $1.12 billion
— Saline County (Home to Salina): $1.11 billion
— Reno County (Home to Hutchinson): $947.73 million
— Leavenworth County: $685.85 million
— Finney County (Home to Garden City): $673.75 million
— Ellis County (Home to Hays): $622.11 million
— Ford County (Home to Dodge City): $575.84 million
— Lyon County (Home to Emporia): $465.41 million
— Geary County (Home to Junction City): $427.35 million
• And just because the warm weather has done wonders for my arthritic fingers and toes, I decided to do one more math exercise to pass along. Here’s a look at per capita spending levels in the large counties. I find the numbers interesting because they provide a little more context. A county like Johnson County should have a lot more retail sales than a county like Douglas County, if for no other reason than it has a lot more people. The per capita numbers give you an idea of how well a market is doing in terms of pulling in outside residents to shop, and they also may give you an idea of whether residents of the county have more disposable income to spend.
— Ellis County: $21,430 per capita
— Saline County: $19,931 per capita
— Johnson County: $19,718 per capita
— Finney County: $18,320 per capita
— Sedgwick County: $17,612 per capita
— Ford County: $16,660 per capita
— Shawnee County: $16,449 per capita
— Wyandotte County: $15,853 per capita
— Manhattan: $14,884 per capita
— Reno County: $14,873 per capita
— Douglas County: $14,485 per capita
— Lyon County: $13,959 per capita
— Geary County: $11,540 per capita
— Leavenworth County: $8,647 per capita
Lawrence obviously finishes in the lower half of that list. Some people would argue Lawrence is destined to always be low on that list because we are too close to major shopping districts in Johnson County and Topeka. Others argue that Lawrence could move up the list if it allowed more shopping developments to occur in Lawrence, thus giving people less incentive to drive to Topeka or Johnson County.
That’s an argument that likely is to continue. One thing that is a little more concrete: State numbers show that out of the 93 Kansas counties that have a local sales tax, 56 of them saw their sales tax totals decline in 2016. Douglas County ought to be pleased that it is not yet among them.
You want statistics. I’ve got ‘em. KU’s football team has a better 2016 record than Oklahoma, K-State and Missouri. After 96 hours of college football on a Labor Day weekend, you will go through 192 bags of Doritos, three overheated remote controls and not nearly enough ScotchGard. I even have a couple of new statistical reports on Lawrence’s economy. Retail sales are surging while home sales are slumping.
• First, a look at retail sales. In a trend that has held steady pretty much the entire year, Lawrence continues to lead the state in sales tax growth.
Lawrence officials recently received their August sales tax check from the state, and collections were up 3.8 percent compared with the same one-month period in 2015. (A reminder: Even though the report is for August, due to a lag in reporting, the report actually measures sales activity that happened about 30 to 60 days ago.)
As usual, the more important number is the cumulative total for the year. That’s where Lawrence continues to outshine the other large retail centers in Kansas. Here’s a look:
— Lawrence: up 5.3 percent
— Olathe: up 3.9 percent
— Topeka: up 3.2 percent
— Overland Park: up 2.3 percent
— Kansas City: up 1.7 percent
— Johnson County: up 1.5 percent
— Manhattan: up 1.4 percent
— Sedgwick County: up 1.2 percent
— Salina: down 2.8 percent
— Lenexa: down 6.1 percent
The numbers are good news for more than just the city’s retailers. If the trend continues, it will be good news for the city’s budget too. The city budgeted sales tax revenues to grow by 3.7 percent for 2016, or in dollar terms, about $940,000. If the city can finish the year with a 5.3 percent increase, it’ll exceed its estimates by about $360,000. Of course, things could change quickly, especially if Lawrence has a lackluster holiday shopping season for some reason.
As for why sales tax collections are on the rise, that’s always a bit of a guessing game. City officials, though, continue to point to a few key areas. The city hasn’t yet analyzed the August sales tax distribution, but in a report on the July distribution, the city noted the sale of building supplies continues to be the biggest driver of the increase. Sales of building materials are up 27 percent compared with the same period a year ago. The biggest change in that sector has been the opening of Menards store near south Iowa Street.
The city also notes the auto industry and the grocery store industry also are doing well. Year to date, motor vehicle and parts sales are up 8 percent, while sales from food and beverage stores (not to be confused with bars and restaurants) are up 7 percent.
There is one area that has declined significantly in 2016, but consumers likely don’t mind. Sales taxes charged on utility services — think water, gas and electricity bills — are down 11 percent year to date. Rates for those services haven’t gone down, but usage evidently has. But that too could change quickly.
• The news isn’t as bright for home sales. The Lawrence Board of Realtors recently released figures for July home sales. It was a rough month.
Home sales in Lawrence fell by about 23 percent in July, compared with the same period a year ago. The weak July pushed year-to-date totals squarely into negative territory. Year to date, home sales are down 5.3 percent, for a total of 756 sales.
The reason for the downturn is beginning to sound like a broken record. (Did somebody mention records? I hear KU’s football team has a better record than K-State’s.) The supply of homes on the market is very tight, according to real estate professionals.
Carl Cline, president of the Lawrence Board of Realtors, said the lack of homes for sale is having a “significant impact” on the market. “The drop in July sales is attributable to a shortage of supply and not a drop in demand,” he said. “Segments of this market have buyers in line for just the right listing.”
The tight supply of homes has been a pretty consistent theme for the Lawrence market all year. Really, it has been building for a couple of years. In 2014, the median number of days a home sat on the market before selling was 34. In 2015 that dropped to 24 days. Thus far in 2016 it has dropped to 16 days.
Other statistics of note from the recent report include:
— Despite there being a shortage of homes on the market, the sales of newly constructed homes dipped a bit in July, falling to 11, compared with 13 in July 2015. Year to date, however, sales of new homes are up by nearly 24 percent. Lawrence builders are on pace to post their second straight year of gains.
— The number of active listings on the Lawrence market stands at 288, down from 317 at the same time in 2015 and 417 in July 2014.
— Home prices are starting to rise significantly in Lawrence. Through July, the median selling price of homes is $176,175, which is up 6.8 percent compared with the same period a year ago. If July was any indication, those numbers may rise more rapidly during the rest of the year. The median selling price for homes in July rose 13.9 percent compared with July 2015.
Sales tax collections on the rise in early part of 2015; city sharpening pencil to build $50 million sewer plant on budget
While the forklift drivers are dutifully unloading all the clearance rack Easter candy at my house, there’s a new report out that shows Lawrence shoppers did a pretty good job of keeping the cash registers ringing during the Valentine’s Day period as well.
The latest sales tax report from the Kansas Department of Revenue shows taxable sales in Lawrence from the mid-February to mid-March period were up 4.2 percent compared with the same period a year ago. The year-to-date numbers for 2015 are even more impressive. Thus far, taxable sales — most of which are retail sales but also include sales taxes on items such as your utility bills — are up 5.6 percent compared with the same period a year ago.
The 5.6 percent growth rate puts Lawrence in the top half of the large retail centers in the state. Here’s a look at how other Kansas communities fared:
— Kansas City: up 6.4 percent — Lenexa: up 7.6 percent — Manhattan: up 3.4 percent — Overland Park: down 0.3 percent — Salina: up 5.6 percent — Sedgwick County: up 3.1 percent — Topeka: up 2.1 percent
It will be an interesting year to watch retail sales in Lawrence. There’s lots of activity on south Iowa Street. This year will be the first full year for Dick’s Sporting Goods in the market, PetSmart just recently opened its store next to Dick’s at 27th and Iowa streets. As we previously reported, Ulta Beauty and the Boot Barn also are scheduled to open later this year at the 27th and Iowa street shopping center. Then, just down the road, Menards will open the largest home improvement center in the city near 31st and Iowa. There are multiple pad sites available around that store, although there haven’t been signs yet that tenants have been found for those spaces. And there also is development out west. Sprouts is opening a new grocery store just north of the Sixth and Wakarsusa interchange.
All those stores have the potential to generate significant amounts of sales tax revenue, so it will be interesting to watch whether Lawrence’s sales tax totals over the next couple of years rise significantly. There’s certainly been a debate among some about whether the new stores will add new sales to the Lawrence market or whether it will just shift existing sales around. The numbers probably won’t be definitive. (That’s a way of saying we’ll probably continue to argue about that point.)
But thus far, retail sales in Lawrence are on an impressive run. In 2014, sales tax collections grew by 4.1 percent, which was the second fastest growth rate of the eight major cities that we track. That’s despite the fact that Lawrence continues to have per capita retail spending that is significantly less than other cities. In 2014, our per capita spending was $15,857. Fellow university community Manhattan had per capita spending of $19,236, or about 20 percent greater than Lawrence’s. Maybe Lawrence never will have per capita spending reach that level since we are so close to the major shopping areas in Kansas City.
But there certainly have been arguments that Lawrence can attract more outside-the-community shoppers from places such as Franklin County and Jefferson County who may find it more convenient to run into Lawrence than to deal with the larger crowds in Kansas City. If Lawrence could just increase its per capita spending — either through purchases made by Lawrence residents or by people outside the community coming here to shop — by 1 percent, it would add about $15 million in sales to the Lawrence economy. That $15 million in sales would add about $400,000 a year in new sales tax revenues to the city and county coffers.
If Lawrence somehow could grow its per capita spending levels to equal Manhattan’s, that would amount to about another $337 million a year in retail spending in the city. That would add about another $8.6 million to the sales tax coffers of the city and the county.
In other news and notes from around town:
• When it comes to big numbers, plans for a new sewage treatment plant south of the Wakarusa River kind of take the cake at Lawrence City Hall. If you remember, bids for that project created a few too many big numbers last month. Commissioners rejected the bids after they came in about $5 million more than expected. Well, the project has been rebid, and the results have proved that the best way to get a project to come in closer to engineers' estimates is to . . . raise the engineers' estimates. Previously the sewer treatment plant had an engineers' estimate of $45.9 million. When the project was rebid, engineers increased the estimate to $51.3 million, largely because construction costs are on an upward trend right now.
New bids for the project did come in below the $51 million estimate, but are still above the $45 million to $46 million that city officials have budgeted for. Garney Construction submitted the low base bid at $47.15 million. Crossland Heavy Contractors was the only other bidder at $49.3 million.
City officials, though, are optimistic they’ll be able to make the new bid work. Unlike the last time the project was bid, the city asked for several bid alternates that will allow certain parts of the project to be deleted. By making some deletions, it appears the bulk of the project will be able to be constructed within that $45 million to $46 million range. That price range is important because anything above that would likely require sewer rate increases greater than those that already have been approved.
“The City Commission has made it clear that it wants to move ahead with this project, but it wants to move ahead within the already approved rate plan,” City Manager David Corliss said.
Staff members are looking at the possible deletions and are expected to make a recommendation to the commission in late April.
“But we have some good options now,” said Dave Wagner, the city’s director of utilities.
As far as what may be cut, some options are directly related to the technical sewage treatment operations of the plant, while others are related to office space, vehicle storage and other such ancillary functions.
City officials say the new plant is needed to help the city meet EPA treatment requirements and also to give the city the needed treatment capacity to grow in the coming decades.
Plans being developed for former Sunrise Garden Center in eastern Lawrence; sales tax numbers show local holiday spending down slightly
Plans are in the works between a new nonprofit and a private business to take over the vacant eastern Lawrence property that formerly housed the Sunrise Garden Center.
This spring will be another season that Lawrence green thumbs won’t be able to go to Sunrise Garden Center for bulbs, plants or just advice on what this green stuff is on their thumbs. If you remember, Sunrise closed its doors in late 2013, and the 3.5 acre site at 15th and New York streets has been vacant ever since.
But a new nonprofit is putting together a plan to buy the property, along with a Lawrence-based business that manufactures tofu. Melissa Freiburger is the co-founder of The Sunrise Project. She said her nonprofit has teamed up with Central Soy Foods in an effort to purchase the site. Central Soy Foods would use the site to manufacture its tofu and tempeh products, and the nonprofit would use the greenhouses and other assets to host youth programs and other events that educate about the importance of locally grown foods and other issues of sustainability. Freiburger envisions the site serving as a community greenhouse and also hosting cooking, gardening and similar workshops.
“We really just want to create a very vibrant green space in the community,” Freiburger said.
Central Soy Foods is led by longtime Lawrence businessman David Millstein. If you remember, we reported back in August that Millstein was seeking a new location for the company’s production plant. But a plan to move the operation to a rural homestead didn’t win the necessary approvals. Currently, the company — which has been around since 1978 — operates on a fairly small scale. It produces about 2,000 pounds of tofu and tempeh per week. It primarily sells its products in local grocery stores and a few chains in the Kansas City area.
Millstein told me he thought the site would work very well for the project. He’s proposing to keep the two gabled greenhouses, in part, because he considers those structures to have historical value. Millstein has been a longtime historic preservationist with several buildings in downtown Lawrence. He said he’s contemplating removing the one hoop greenhouse on the site and replacing it with a production facility. He said one other food producer in the area has expressed an interest in sharing the space. He also said he thinks there could be someone who would want to operate the greenhouses to sell micro greens or other such products to area restaurants and grocery stores.
“It has a chance to be a really symbiotic green project,” Millstein said.
The project, though, does have to win some approvals from City Hall. Millstein said he is hopeful neighbors will find the project compatible with the neighborhood.
“I think there probably would be less commotion with this project than when it was Sunrise,” said Millstein, who said the most of the time the site would have fewer than 10 employees at it.
The project also still has some financial questions. Freiburger said the nonprofit is seeking to raise $250,000 to meet its share of the purchase price of the property. The nonprofit — whose legal 501(c)3 name is Lawrence Community Food Alliance — has started a fundraising drive. Freiburger said one neighbor of the site already has pledged $25,000 to the project.
“We feel like it really can become something amazing for the neighborhood,” said Freiburger, who lives near the property. “And the longer the site sits vacant, I know there is a fear that it will become apartments or something like that.”
People can find out more information about how to donate at the group’s website, sunriseprojectks.org.
In other news and notes from around town:
• I don’t know about you, but I didn’t have much tofu in my stocking this past holiday season. (I once did ruin a good pair of shoes, though, trying to hide tofu in my stockings at a dinner party.) Regardless, there are new numbers out about retail sales in Lawrence during the holiday season, and they suggest stockings may have been a touch light this year.
The city has received its latest sales tax report from the Kansas Department of Revenue. Technically, the report is the first one for the 2015 calendar year, but since sales taxes are paid in arrears, the numbers provide a picture of sales activity during the holiday season. This report generally shows sales from about mid-November to mid-December.
The report found sales tax collections in Lawrence fell by 1.4 percent, compared with the same period a year ago. Lawrence seemed to be on the wrong side of the trend this past season. Of the other large retail markets in the state, only one other posted a decline. Here’s a look:
— Kansas City: up 1.8 percent
— Lenexa: up 2.2 percent
— Manhattan: up 2.3 percent
— Overland Park: down 3.5 percent
— Salina: up 5.1 percent
— Sedgwick County: up 0.4 percent
— Topeka: up 0.8 percent
But we don’t yet have a full picture of the holiday spending. The next report will more fully capture that last two weeks before Christmas, so perhaps here in Lawrence we were just later in getting our holiday shopping started.
As always, City Hall officials will keep a close eye on sales tax collections this year. Healthy sales tax growth is an important part of the city’s budget. It will become an even more important aspect if commissioners are serious about trying to figure out how to build a new police headquarters without increasing taxes.
Sales tax revenues in 2014 grew by a very healthy 4.1 percent. One month isn’t anything to fret about, but if Lawrence wants to match or exceed that pace in 2015, it won’t want many more reports like this most recent one.
Here I thought I was the only one who visited my banker around Valentine’s Day. I’ve found that a home equity loan is useful when you’re trying to buy a year’s worth of forgiveness.
But apparently I’m not alone because a new report from City Hall shows retail spending spiked during the mid-February through mid-March period. The city’s latest sales report shows retail spending increased by 6.3 percent during the mid-February to mid-March period, compared with the same period a year ago.
It is always risky to put too much stock into one month’s worth of numbers, but we’ll see if this is the beginning of a spring spending surge. Regardless, retail sales in Lawrence are off to a solid start in 2013. Sales tax collections through the April reporting period are up about 3.1 percent compared with the same period a year ago. (The most recent report was for the April reporting period, but because of a lag time in processing, the numbers represent sales generally made in mid-February to mid-March.)
Here’s a look at how Lawrence’s retail sales totals stack up to past years. As always, the number in parenthesis is adjusted for inflation. Take a close look at those numbers, because for the first time in awhile the adjusted numbers show that Lawrence basically has returned to the pre-recession numbers of 2008 and early 2009. In other words, perhaps we have about dug out of that hole.
2013: $456 million
2012: $442.4 million ($448.5 million)
2011: $422.3 million ($437 million)
2010: $406.2 million ($433.6 million)
2009: $421.4 million ($457.22 million)
2008: $421.1 million ($455.2 million)
As for 2013, Lawrence’s growth rate is slightly above the statewide growth rate of 2.9 percent. Here’s a look at how Lawrence’s growth rate of 3.1 percent stacked up with some of the larger communities in the state:
• Emporia: up 2.9 percent
• Hays: up 3.3 percent
• Kansas City: up 5.8 percent
• Manhattan: down 3.2 percent
• Olathe: up 3.8 percent
• Ottawa: up 5 percent
• Overland Park: up 1.5 percent
• Shawnee: up 4.5 percent
• Topeka: down 0.1 percent
That list tells me one thing: My wife has been shopping in Kansas City. Dangit. I should have kept that joke to myself. Now, I have to find my banker’s number again.