Lawrence shoppers stagger toward year-end finish line, new report shows; sales tax figures soar for area small towns
photo by: Nick Krug
Two types of people seem to exist at the end of the holiday season — one full of joy and bounce as they sprint to the year-end finish line, and another wondering whether anyone would find them if they took a nap under the Christmas tree. Lawrence seems to be finishing the year much like the second group when it comes to the local economy.
The latest sales tax figures have been released by the Kansas Department of Revenue, and they show the state’s largest retail cities have separated into two groups. The report is the final one for 2020, but because of normal delays in reporting, the figures primarily represent sales made in October.
For the month, six of the 10 large retail centers we track posted increases in sales tax collections compared to the same period a year ago. The other four posted declines. Lawrence was in the declining group, and this marks the fourth consecutive month that Lawrence has posted a decline in collections. Here’s a look at the most recent figures:
• Kansas City: up 6.3%
• Olathe: up 4.6%
• Shawnee: up 4.4%
• Topeka: up 4.2%
• Lenexa: up 0.4%
• Salina: up 0.3%
• Sedgwick County: down 1.8%
• Lawrence: down 1.9%
• Overland Park: down 3.7%
• Manhattan: down 5.8%
Whether it was an early start to the holiday shopping season or the approximately 2.5 million pounds of nacho cheese and bright red face paint purchased for Kansas City Chiefs watch parties, October produced some pretty strong numbers in the area. The state’s two university communities, though, missed out on that party. But — yes, say it with me — at least we aren’t Manhattan. This might be the month having fewer fans in the football stands started to really show up in the Manhattan numbers.
But, when we shift gears and look at the numbers for the entire year, we can’t use that old Manhattan refrain. Instead, we can say “At least we are not Overland Park.” (It really doesn’t rile them when we say that, in part, because the SUV windows are both tinted and soundproof.) The longtime king of Johnson County is having the worst sales tax year of any of the big retail markets in the state. Overland Park was seeing weak sales tax numbers before the pandemic, but since the city is home to the largest mall in the area, COVID certainly has made for a tough rebound there. As with the numbers for the month, four of the 10 big retail markets posted declines in sales tax collections for the year. Here’s a look at the total year numbers compared to 2019 totals.
• Topeka: up 1.3%
• Lenexa: up 1.2%
• Olathe: up 0.9%
• Sedgwick County: up 0.5%
• Salina: up 0.4%
• Shawnee: up 0.3%
• Kansas City: down 2.3%
• Manhattan: down 3.0%
• Lawrence: down 3.7%
• Overland Park: down 6.5%
It makes sense that Lawrence hasn’t seen the type of year some other retail communities have posted. Places like Topeka and Olathe aren’t contending with losses in population that places like Lawrence and Manhattan are. There are fewer people living in those towns as students are staying home and taking classes online. In other words, Lawrence shouldn’t be too depressed about being near the bottom of this list. I think at the beginning of the pandemic, there were a lot of people who would have bet on a larger decline in sales tax revenue.
The downturn also hasn’t created a financial crisis for the city. The finance department at City Hall hasn’t yet put out its December report, but the November report showed that sales tax collections were about 4% below budget, which would result in about a $1.6 million shortfall. Certainly not ideal, but workable within the city’s overall budget.
The shortfall would be greater if not for the internet. Cities collect a special type of sales tax, called a use tax, that primarily is charged when someone purchases something from an online retailer located outside the city limits. As we’ve been reporting all year, use tax collections have been up significantly in Lawrence. They were up a whopping 49% for the month. For the entire year, it was up a more modest 12%, or about $395,000 more than a year ago.
That is a good growth rate by any measure, but it is far from the best. There were some communities that turned far more to the internet than Lawrence did. I didn’t look at use tax numbers for all 10 of the major retail markets, but instead looked at some of the largest, plus fellow university community Manhattan. Here’s a look:
• Olathe: up $3.2 million or 63%
• Topeka: up $1.3 million or 23%
• Manhattan: up $300,000 or 20%
• Lawrence: up $395,000 or 12%
• Sedgwick County: up $1.4 million or 10%
• Overland Park: up $900,000 or 10%
It is the end of the year, so of course I have more numbers for you. Let’s take a quick look at how several smaller towns around Lawrence fared this year in terms of sales tax collections. Almost all of them posted increases from a year ago. As we reported earlier in the year, it did appear that small towns were benefiting from more people shopping closer to home. This list indicates that trend largely held.
• Oskaloosa: up 13.3%
• De Soto: up 11.1%
• Ottawa: up 8.0%
• Tonganoxie: up 7.0%
• Baldwin City: up 4.7%
• Overbrook: up 4.7%
• Lecompton: up 2.4%
• Leavenworth: up 1.9%
• Perry: up 1.7%
• Eudora: down 2.1%
As a reminder, all these numbers are a bit early to capture how the holiday shopping season went for area retailers. Because of the normal lag times in reporting, it will be the January 2021 and February 2021 reports that give a better idea of how the holiday shopping season turned out for retailers.