Lawrence seeing a slowdown as sales tax collections now dip into negative territory for the year
photo by: Nick Krug
February was cold in more ways than one in Lawrence. Yes, there were the temperatures outside, but you should have felt the chill inside from all those cheap Valentine’s Day gifts. At least the latest numbers from the state show something caused retail spending to take a downward turn in February. Plus, the statistics show most of 2019 hasn’t been good either.
The city of Lawrence received its April sales tax check from the state recently, and it showed local sales tax collections were down by about 2.3% from the same period a year ago. Because of a lag in reporting times, the city’s April check mainly represents sales that occurred in February.
A one-month decline isn’t anything too unusual, but the city now has had declines two months in a row. The March sales tax check represented a big decline. March collections were off by 7.8% compared with the same time a year ago. That March report largely represented sales made in January. If you are keeping track at home, that means shoppers since the beginning of 2019 have been tighter than my Easter suit. (How can Peeps cause you to gain weight? They’re so light.)
The city’s sales tax checks in January and February — which largely represented sales in November and December — came in reasonably strong. Shoppers seemed to be in a bit of a buying mood for the holidays. But there are signs of a pullback since the new year began, despite news that the national economy has grown at a very robust rate in the first quarter of the year. Economists, though, have been saying that the national growth has been fueled more by business spending than consumer spending, and those types of increases generally don’t show up in sales tax collections.
Whatever the case, Lawrence now is in negative territory for the year. With four of the 12 sales tax checks now in the bank, collections in Lawrence are down 1% compared with the same time period a year ago. It is still early, but Lawrence needs that trend to reverse. The city has budgeted for about a 2% increase in sales taxes in 2019. The city relies on sales taxes to generate about $40 million a year in revenue that funds everything from basic services to public transportation, affordable housing programs and road repair.
Lawrence, though, isn’t alone in feeling declines in 2019. Most of the other major retail centers in the state also are coming in below last year’s levels. Here’s a look:
• Manhattan: up 0.9%
• Shawnee: up 0.4%
• Sedgwick County (Wichita): up 0.3%
• Olathe: down 0.3%
• Kansas City, Kan.: down 0.5%
• Lawrence: down 1%
• Salina: down 4.8%
• Overland Park: down 5%
• Topeka: down 5.2%
• Lenexa: down 9.5%
It will be interesting to watch the rest of the year. Lawrence hasn’t seen a yearlong decline in sales tax collections since 2010, when we were still recovering from the Great Recession. But 2018 came close to posting a decline. A weak second half of the year left Lawrence with only a 0.8% increase for the year.