Lawrence finishes first quarter of 2024 with declining sales tax revenues, but still better than most

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Maybe Lawrence City Hall forgot to order new calendars for 2024. Whatever the case, the city has collected almost exactly the same amount of sales tax revenue through the first quarter of 2024 as it did during the same period in 2023.

On a balance of more than $7.7 million, the difference between the two years is just $295. While mathematically interesting, that’s not good for a city that has budgets that are counting on 5% sales tax growth this year.

But, it could be worse. Just look at nearly any other major retail market in the state for proof.

Lawrence’s sales tax collections thus far for 2024 are down less than 0.1% compared to a year ago. That lackluster number currently puts Lawrence as the second-best performing major retail market in the state. In short, retail spending in Kansas has gotten off to a very slow start in 2024.

Statewide, local sales tax collections are down 0.7% compared to a year ago. Many of the state’s largest retail centers are performing below that statewide average. Lawrence is an exception, finding itself above average but still losing ground.

Here’s a look at the year-to-date growth rates for some of the largest retail centers in the state:

• Shawnee: up 0.4%

• Lawrence: down less than 0.1%

• Topeka: down 0.3%

• Kansas City: down 0.6%

• Sedgwick County: down 2.6%

• Overland Park: down 2.8%

• Olathe: down 2.8%

• Salina: down 2.9%

• Lenexa: down 3.5%

• Statewide: down 0.7%

I don’t have any particularly astute analysis to share on why the year has started so slow. However, it is not particularly shocking. Inflation is moderating. For a couple of years, sales tax collections were going up by 4% to 5% even if people weren’t increasing the number of items they were buying. That’s less the case now.

Additionally, the Lawrence results follow the trend line of the last few years. Sales tax collections grew by 9.1% in 2021, then by 8% in 2022 and then by just 3.9% in 2023. So 2024 definitely began with a question of whether we were still on that slide. Thus far, the answer seems to be yes.

The numbers are worth watching on a couple of fronts. One, they give us some idea of how hot or cold the local economy is at any given time. Plus, they are important to the finances of Lawrence City Hall, which relies heavily on sales tax collections for its various budgets. The city builds a lot of its budgets — particularly its capital improvement plan that funds road and building improvements — on an assumption that Lawrence sales tax collections will grow by at least 5% per year for the foreseeable future.

There was reason to believe at the end of 2023 that such an assumption might be aggressive. Not only did Lawrence’s sales tax collections fail to grow by 5% in 2023, none of the other major retail markets we track cracked the 5% level either.

Since we are at the quarter-way mark for the year, I’ll also pass along sales tax results for some of the smaller communities in the area:

• De Soto: up 64.2%

• Lecompton: up 60.8%

• Perry: up 6.7%

• Ottawa: up 5.8%

• Basehor: up 5.6%

• Tonganoxie: up 3.2%

• Eudora: up 0.7%

• Gardner: down 1.9%

• Spring Hill: down 2.0%

• Oskaloosa: down 2.2%

• Bonner Springs: down 8.6%

• Overbrook: down 10.6%

• Wellsville: down 16%

De Soto continues to jump off the list. Its sales tax collections are soaring as construction work continues on the $4 billion, 4,000-job Panasonic battery plant in that community. Just in the first three months of the year, De Soto has seen its sales tax collections grow by about $200,000 from a year ago.

As for Lecompton, there is not a $4 billion battery plant under construction there. That number appears to be more of an anomaly, rather than something we will see month after month. The size of the windfall is also not as much as in De Soto. Lecompton’s collections are up about $8,000 for the year.


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