Lawrence, state see late surge in sales tax collections; city sales taxes end 2021 up by 9%
Think of it as a nearly $700,000 stocking stuffer at Lawrence City Hall.
In the days right after Christmas, the city of Lawrence received its final sales tax check of 2021 from the state of Kansas, and it indeed was $688,000 more than the city received in December 2020. All told, it was a whopping increase of nearly 33% for the month.
Such good tidings and cheer were not confined to Lawrence, either. City and county governments across the state hit the jackpot with December sales tax checks, according to the latest report from the Kansas Department of Revenue. Local sales tax collections across the state were up 32.3%, or about $28 million, for the month.
A strong holiday shopping season, however, is likely not the reason for the increase. There are national reports that holiday shopping was brisk, but those sales likely aren’t yet showing up in the state’s numbers. The state’s December sales tax report doesn’t actually measure sales made in December. Rather, due to normal reporting delays, the December report primarily measures sales made in October.
So, I guess holiday sales could be responsible, as long as the holiday is Halloween. I did buy full-size Snickers for Halloween. (Before neighborhood kids call me a liar, note that I didn’t say I handed out full-size Snickers.)
There are a couple of more likely explanations, though. The first is a general increase in buying activity in October 2021 compared to October 2020. In October 2020, the pandemic still had many activities shut down. I wouldn’t say October 2021 was a complete return to normalcy, but there was a lot more going on.
One of the things going on was inflation, which is reason No. 2 why these numbers may be so high. Retail activity doesn’t have to increase in order for sales tax revenue to increase. You could have the same number of buyers buying the same amount of stuff and still see an increase in sales tax revenues, if that stuff is priced higher than it was a year ago.
It may have been in October when I started noticing how much prices had gone up on some items. (I think it was October when I signed the paperwork for the home equity loan to buy the full-size Snickers bars.) Nationally, inflation numbers have been running anywhere from 5% to 7% annualized over the last few months. That alone will provide a boost to city sales tax collections. But inflation has not been 33%, so the latest numbers certainly show that buying activity — in addition to inflation — was booming in the state.
The end result is a historically strong year for Lawrence sales tax collections. While they started out slow in 2021, there ended up being multiple months of double-digit percentage increases. In total, Lawrence’s citywide sales tax collections were up about $2.3 million, 9.1%, compared to 2020.
I’m not sure Lawrence has ever had a 9.1% increase for the year. More traditional increases are 2% to 3%, with really strong years in the 5% to 7% range. In 2020, the city posted a 3.7% decline, which was one of the biggest declines of any major retail market in the state. So, 2021 was definitely a bounce-back year.
However, Lawrence’s comeback didn’t bounce quite as high as many other cities in the state. While the 9.1% increase is a historically high number, almost every retail market in the state was posting historic increases. Many of those communities posted growth rates several percentage points better than Lawrence’s. Here’s a look at year-to-date growth rates for the state’s largest retail markets.
• Lenexa: up 13.7%
• Manhattan: up 12.0%
• Overland Park: up 11.9%
• Kansas City: up 11.8%
• Salina: up 11.1%
• Sedgwick County: up 10.2%
• Lawrence: up 9.1%
• Olathe: up 8.5%
• Shawnee: up 7.8%
• Topeka: up 7.5%
The city also posted big increases in a special type of sales tax that is charged for online purchases that are delivered to residents’ homes. In that regard, Lawrence did have one of the largest growth rates in the state, a sign that online shopping also was booming in Lawrence. Here’s a look at year-to-date collections of that special tax, which is called a use tax:
• Olathe: up 15.5%
• Sedgwick County: up 13.3%
• Lawrence: up 12.6%
• Kansas City: up 12.4%
• Overland Park: up 11.4%
• Manhattan: up 9.3%
• Topeka: up 8.3%
• Salina: up 5.8%
• Lenexa: up 5.1%
And finally, since it is the end of the year, I know you want to see even more numbers. Here’s a look at sales tax collections for a host of area cities in 2021.
• Tonganoxie: up 13.4%
• Eudora: up 12.8%
• Baldwin City: up 10.7%
• Oskaloosa: up 5.7%
• De Soto: up 5.6%
• Leavenworth: up 4.3%
• Ottawa: up 3.7%
• Overbrook: down 3.9%
• Lecompton: down 5.6%
The sales tax numbers are important because they give a sense of how much business retailers are seeing in any particular community, and also because they are a major source of revenue that the city of Lawrence relies on to fund its operations.
The latest returns will result in Lawrence getting more sales tax revenue than it budgeted to collect in 2021, but before I put an exact number to that I need to do more figuring and touch base with city officials. The same holds true for Douglas County. It appears to have collected significantly more in tax revenue than it budgeted to collect. Look for more info on both of those potential windfalls in the coming days.






