I don’t know if it was all the notebooks and pencils or if it was parents hosting their own private celebrations, but the return of kids to school returned Lawrence’s retail scene to slightly healthier ground.

The latest statistics from the Kansas Department of Revenue show Lawrence experienced an 18 percent increase in sales tax collections during the time period that normally is punctuated by back-to-school shopping.

Lawrence City Hall needed the boost, and could use several more before the end of the year if it hopes to avoid a budget shortfall in its sales tax fund. As we reported last month, Lawrence was on pace to have about a $3 million budget shortfall in its sales and use tax funds, as general sales tax collections — and particularly taxes for online purchases — are no longer growing as fast as they once did.

With the boost from the latest numbers — which were included in the state’s October report but primarily represent sales made in August — Lawrence sales tax collections have grown by 4.3% for the year. That’s a good jump for sales tax collections. When we reported last month, the city was on pace to finish the year with about 3% growth in sales tax collections.

But then the big October report came, and Lawrence’s overall growth percentage jumped in kind. If Lawrence ended the year with about 5% growth in sales tax from 2022 totals, that would be another strong year overall. However, it likely still would result in a budget shortfall for the city. When the city created its 2023 budget, which was crafted in the summer of 2022, it overestimated how much revenue it would collect in sales taxes in 2022. It also budgeted fairly aggressively for sales tax growth in 2023. Those two factors have put the city in a situation where it needs about 9% growth in the city’s sales tax collections to meet the city’s original budget projections.

Sales tax collections are an important part of the city’s overall budget, so City Hall leaders will be rooting for a strong couple of months to end the year on the sales tax front. The latest report should help the city shrink that estimated $3 million shortfall. But some perspective is also helpful. A $3 million shortfall would be significant, but the city does have an overall budget of $400 million, so it wouldn’t produce a real crisis.

The bigger importance of the sales tax collection figures likely is what they might tell us about whether the economy overall is heating up or cooling down. You would think an 18% increase in sales tax collections would be nothing but a positive indicator. But, that’s not necessarily the case. Communities all over the state saw their sales tax collections surge during the most recent reporting period. Lawrence’s growth rate actually was below the statewide average, and its year to-date growth also is below the statewide rate.

Statewide, local retail sales tax collections were up 29% during the October reporting period, which is more than 10 percentage points greater than Lawrence’s increase during the period. Year-to-date, local sales tax collections are up 5.9%, or about 1.5 percentage points greater than Lawrence’s results, thus far.

Regardless, Lawrence is still doing relatively well compared to other major retail markets in the state. As the list below shows, Lawrence’s year-to-date collections are a bit above the average of the other large retail markets in the state. For whatever reason, smaller communities are seeing a bigger bounce in sales tax collections than larger communities as the year wraps up.

Here’s a look at how other large retail markets in the state have fared thus far, year-to-date, with sales tax collections:

• Kansas City: up 6.2%

• Topeka: up 5.8%

• Lenexa: up 5.6%

• Lawrence: up 4.3%

• Sedgwick County: up 4.2%

• Overland Park: up 4.1%

• Salina: up 3.3%

• Shawnee: up 3.1%

• Olathe: up 2.6%