Lawrence sales tax collections post their best month of the year; rest of state also soars
That boom you heard in July wasn’t a firework after all. Apparently it was the Kansas economy exploding with new energy. The state has released its latest sales tax report, and it shows the vast majority of cities and counties in the state posted big increases in sales tax collections in July.
Remarkably, the report shows that more than 80% of the 381 counties and cities that have a local sales tax posted an increase compared with the same month a year ago. In most cases, collections were up by double-digit growth rates. Statewide, the average increase was 12.5%.
Why sales tax collections went up so much in July, however, is something I can’t explain. (For the record, my lawyer also says I shall not explain why my neighbor’s foundation developed a crack on July 5 or why some of my Independence Day guests still report a slight ringing in their ears.)
The big increase indeed may be a statistical anomaly, as the prior month’s report from the state showed a lot of cities posting a decline. It may be that something happened in the reporting process that caused some of those June revenues to get booked in July. As I’ve said before, you don’t want to put too much stock in any one month’s numbers; rather, you want to look at the trends for the entire year.
Regardless, Lawrence benefited from whatever happened. The city posted a 7% increase in sales tax collections for the month compared with the same month a year ago. Note: The state’s latest report is for September, but because of lag times in reporting, the numbers in the September report mainly represent sales made in July.
The 7% increase is by far the best monthly showing for Lawrence this year. It also continues a winning streak for the city. This marks the fourth straight month the city has seen increases in sales tax collections. That’s been a welcome sign for City Hall budget-makers because the first half of the year produced a downward trend for local sales tax collections.
In fact, sales tax collections were so off in the first half of the year that they just now are creeping into positive territory for the year. With the 7% increase in the September report, the city’s year-to-date collections are now 0.5% — or about $100,000 — greater than they were a year ago.
The city still has three more sales tax checks to receive from the state in 2019, so Lawrence has a chance to keep its streak alive of posting year-over-year sales tax growth. Lawrence hasn’t seen a year-over-year decline in sales tax collections since 2010.
Some groups that receive City Hall funding may be particularly interested in watching how this plays out. Mayor Lisa Larsen has said she would be interested in reconsidering a request for additional funds for Lawrence Community Shelter, if sales tax collections come in better than expected. Larsen made those comments this summer as the City Commission was crafting its 2020 budget and struggling to fully fund a request from the homeless shelter to prop up its weak finances. But Larsen said she was open to reviewing sales tax collections in early 2020 to see if sales tax collections were coming in better than projected. If so, the city could make an amendment to its 2020 budget to provide some additional funding to the homeless shelter.
There are still a few months to go, but this latest report has the city moving in the right direction again.
Further helping the cause is that Lawrence continues to benefit from a special type of sales tax called a use tax. It is the type of sales tax that is charged when people buy items online and have them delivered to their Lawrence homes. It also is charged for other types of purchases made elsewhere but delivered to Lawrence.
Those use tax collections continue to soar in Lawrence. The September numbers were up 19% — or about $81,000 — compared with the September 2018 figures. For the year. Lawrence use tax collections are up about 20% — or about $400,000 — compared with the same period a year ago.
Here’s a look at how sales tax collections — not use tax — are stacking up year to date for other major retail centers in the state:
• Shawnee: up 1.4%
• Sedgwick County (Wichita): up 1.7%
• Lawrence: up 0.5%
• Manhattan: up 0.5%
• Olathe: up 0.9%
• Kansas City: up 0.7%
• Salina: down 0.2%
• Topeka: down 3.5%
• Overland Park: down 3.3%
• Lenexa: down 10.8%
All the Johnson County communities on that list took a big jump upward in the latest report. While we all bought Roman candles, Johnson County may have bought Rome itself. Overland Park posted a nearly 15% increase in sales tax collections for the month, while Olathe posted nearly an 18% increase. Lenexa and Shawnee both posted gains greater than 10%.
Since this September report marks the end of the third quarter, now is a good time to share some numbers from some smaller area communities. Here’s a look:
• Baldwin City: up 0.3%
• De Soto: up 1.7%
• Eudora: up 2.8%
• Lecompton: down 16.6%
• Oskaloosa: down 0.5%
• Ottawa: up 2.6%
• Overbrook: down 5.1%
• Perry: down 28.2%