Lawrence sales tax collections take a turn downward, ending streak of strong growth

photo by: Nick Krug/Journal-World Photo

Downtown Lawrence is pictured in this aerial photo from December 2017.

The summer did not start with a sizzle in Lawrence. It seems odd to say this now as the weather recently has caused me to contemplate whether I have any ties that would go with my collection of sleeveless T-shirts. But, I am talking about consumer spending, not temperatures.

The latest sales tax numbers are out, and they weren’t particularly good for Lawrence. The Kansas Department of Revenue has released its August sales tax report, but due to normal delays in reporting, the figures mainly reflect sales that were made in June.

Sales tax collection were down from where they were in the same period a year ago. That’s despite the pandemic situation certainly being worse in June 2020 than June of this year. But Lawrence’s experience wasn’t unique. Many of the state’s top retail centers saw declines compared to a year ago.

I’m not sure that consumers necessarily were in a particularly bad mood in June, but rather I think June 2020 was the month when a lot of people in the middle of the throes of the pandemic threw up their hands and said I’m going to spend some money regardless. I looked at the story I wrote last year, and it noted that June 2020 sales tax totals were actually better than June 2019 totals, which was very unexpected at the time.

In other words, these most recent numbers may not be a sign of a turn for the worse, but rather just not living up to some pretty strong June 2020 totals. City of Lawrence officials probably are hoping that is the case. As I detailed in an article last month, the city has taken a fairly aggressive approach in budgeting. For the most part, their approach has held up well. Sales taxes have been growing at a very strong pace for most of this year.

But, in order to start 2022 with the cash reserves it has budgeted, Lawrence City Hall needs the pace of sales tax growth to actually increase a bit more. The fact that sales tax collections took a dip in this last report is unwelcome news. But, the city still has four more sales tax checks to collect this year. I’m sure they’ll watch the results closely because if the growth doesn’t materialize, the city will have to dip deeper into its cash reserves to cover their planned spending for 2022, or else cut some planned spending.

Here’s a look at the numbers and how Lawrence compares to the other large retail markets in the state. The first list shows the one month totals:

• Kansas City: up 5.4%

• Manhattan: up 4.4%

• Overland Park: up 4.1%

• Lenexa: up 0.7%

• Lawrence: down 1.2%

• Olathe: down 1.7%

• Sedgwick County: down 2.0%

• Salina: down 2.7%

• Topeka: down 2.9%

• Shawnee: down 3.5%

Statewide, local sales tax collections grew by 0.5% for the one month period. So, Lawrence underperformed the state, but finished in the middle of the pack among the 10 large retail centers in the state.

This next list shows the sales tax collections year-to-date — in other words for the first eight reports of the year — compared to the same period a year ago.

Kansas City: up 11.9%

Manhattan: up 11.4%

Salina: up 9.9%

Overland Park: up 9.8%

Lenexa: up 9.4%

Topeka: up 7.7%

Olathe: up 7.0%

Sedgwick County: up 6.9%

Lawrence: up 6.9%

Shawnee: up 6.8%

Statewide, local sales tax collections are up 9% for the period. So, Lawrence underperformed the state, and also finished near the bottom of the 10 large retail centers in the state. While Lawrence had been doing pretty well in recent months, its reports early in the year weren’t as strong as many other communities.

What is noteworthy now is how Lawrence and Manhattan — the two true college towns in Kansas — appear to be on separate tracks as it relates to a bounce back in retail spending. But we still have some important months to come. The next couple of months’ worth of reports will show the crucial period when students started arriving back in town. Those could be interesting to compare.

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