Sales tax numbers don’t yet show the big drop to come; Kansans saw their earnings rise in 2019, but at below-average rate
photo by: Jackson Barton/Journal-World File Photo
We kind of are in a Road Runner cartoon moment. It is that point of the episode where Wile E. Coyote is running toward the cliff. We all know he is going to drop off the cliff, and, surely after all these episodes, he does, too. That’s where Lawrence and the state are when it comes to sales tax collections. The cliff is getting very near.
The Kansas Department of Revenue released its latest sales tax numbers for cities and counties. And even though it is labeled as the April report, it doesn’t yet show the sharp drop in sales tax collections that everybody is expecting as part of the pandemic shutdown.
State sales tax reports have about a two-month lag time, meaning the April report is largely for sales made in February. Businesses began shutting down in mid-March as part of the pandemic. In other words, this may be the last good sales tax report for awhile.
Lawrence officials are probably wishing it was a little better. The city’s sales tax collections basically kept up with inflation, but not much else. In April, Lawrence’s sales tax collections were up by 1.3% compared with the same month a year ago. The relatively meager growth rate — the statewide average for the month was 3.8% — threw cold water on the idea that Lawrence shoppers were ramping back up. The March report posted a nearly 5% increase, the best of 2020, leading to some hope that Lawrence would bank a couple of big months before the pandemic impact started hitting the books.
Instead, Lawrence underperformed most of the other big retail markets in the state. The list below shows the year-to-date totals for 10 large retail markets, compared with their results from the same period a year. Last month, Lawrence ranked sixth on the list. This month, it has fallen to seventh. Also noteworthy is that Lawrence’s growth rate is now about half the average of the statewide average.
• Salina: up 4.1%
• Olathe: up 3.7%
• Kansas City: up 3.5%
• Sedgwick County: up 3.2%
• Topeka: up 2.7%
• Manhattan: up 1.6%
• Shawnee: up 1.5%
• Lawrence: up 1.1%
• Lenexa: up 0.4%
• Overland Park: down 1.2%
• Statewide: up 2.0%
Sometimes when Lawrence has slow sales tax growth, it has posted impressive numbers in use tax collections, which is the sales tax charged for online purchases. So far in 2020, however, Lawrence’s growth rate has been pedestrian in that regard, too. Use tax collections are up 4.3%, which is beating inflation, but that is a far lower growth rate than what the city has been experiencing. Last year the city’s use tax collections grew by 17.6%. The April report was particularly slow for use taxes in Lawrence, up just 2.2% from a year ago.
But no need to dwell on these numbers any longer. The Lawrence economy is a far different one now. We’ll start to see how different late next month. Shortly after Memorial Day we should get a report that shows how much spending was off in March. The worse report probably will come in late June, which is when we’ll see how much spending was off in April.
In other news and notes, from around town:
• While we are talking about numbers from the past, the federal government recently released a report that showed Kansans weren’t great in 2019 at earning more money.
The Bureau of Economic Analysis released its preliminary numbers for personal income growth in 2019. Personal income in Kansas — which can be anything from wages to stock dividends to Social Security payments — increased by 3.9% for the year. That was better than inflation, but below the nationwide average of 4.4%. Kansas’ growth rate ranked No. 31 out of the 50 states.
Kansas had per capital income of $53,453, which puts Kansas in the middle of the pack nationally, ranked 24th amongst the states. Here’s a look at how we compare with area states, with the second number showing how much total personal income increased in each state:
• Colorado: $61,348, up 6.1%
• Nebraska: $54,871, up 3.3%
• Kansas: $53,453, up 3.9%
• Iowa: $52,636, up 5.0%
• Missouri: $49,589, up 4.0%
• Oklahoma: $47,951, up 4.1%
• Arkansas: $44,845, up 3.9%
Kansas is in the upper half for overall personal income but in the lower half in terms of growth rates.
Perhaps more interesting is a look at the areas where Kansas’ economy seemed to do the best and worst. Health care was the fastest growing industry. Of the 3.9% increase in personal income, health care accounted for 0.34 points of the increase. While that was the top performer in Kansas, the industry didn’t grow as much here as it did in several other states. Nationally, health care added 0.39 points. Construction, warehousing, and local and state government all were industries in Kansas that saw earnings growth significantly above the national average.
One industry in Kansas stood out for how far below average it was: professional, scientific and technical services. This category includes a lot of the research and high tech jobs that states clamor for. Earnings in that category grew in Kansas, but not nearly as much as they did elsewhere. The sector accounted for 0.16 points of Kansas’ 3.9% increase. Nationally, though, the sector added 0.43 points to earnings growth.
Another way to look at it is, of all the states in the country, Kansas got the eighth-smallest boost from the tech sector. None of the states in the middle part of the country did well. Many of the states getting a major boost from the tech sector continue to be on the coasts or near mountains.
The states below Kansas were Michigan, Hawaii, Arkansas, Iowa, Minnesota, Mississippi and West Virginia, which was the one state that actually lost earnings from the sector.
But, like the sales tax numbers above, these probably aren’t worth dwelling on. It’s likely that many people in 2020 would love to have 2019 earnings.