photo by: Nick Krug

A cashier hands a receipt back to a customer after a purchase at Lawrence's Sunflower Outdoor and Bike Shop in this file photo from July 6, 2017.

Early Christmas shopping in my book means there’s still time to wrap the present in the car. Lawrence City Hall budget makers need to hope everybody else is reading from a different book.

The city is on pace to end 2024 with about a $900,000 budget shortfall in sales tax dollars, which is the largest source of revenue the city uses to fund its general operations. A strong surge in early holiday shopping is probably one of the few things that could put the city back on track. But, when I mean early, I mean basically now. Due to the natural lag in the state’s sales tax reporting system, the sales tax check the city receives at the end of December, basically will be for sales made in November. It’s not even certain that sales made on Black Friday would be included in the December check.

In other words, the city’s goose is probably already cooked. We just need to wait a month to determine the doneness.

Here’s a look at the basic numbers, based on the November sales tax report that was released this week: Lawrence sales tax collections are up 0.5% for the year, compared with the same period a year ago. When you add in a special type of sales tax — a use tax, which is charged to online purchases — the tax collections are up about 1% from a year ago.

The key number to keep in mind, though, is 2.7%. That is how much the city needs tax collections to grow in 2024 to meet its revised budget projections. In other words, with 11 months of the year in the books, the city’s growth rate is about half of what it needs to be.

The November numbers did not help the city’s cause at all. Sales tax collections for the November period — basically sales made in October — were down 7% from the same period a year ago.

It wasn’t a great month for sales anywhere in Kansas during the November reporting period. The statewide average was down by 5.7% for the month. Lawrence’s 7% decline was not as bad as some other major retail centers in the state. Here’s a look at November sales tax totals, which don’t include the special use tax dollars:

• Lenexa: down 2.8%

• Salina: down 3.0%

• Shawnee: down 4.9%

• Topeka: down 5.3%

• Kansas City: down 5.5%

• Lawrence: down 7.0%

• Sedgwick County: down 7.7%

• Olathe: down 9.5%

• Merriam: down 10.0%

It is worth noting that Lawrence’s collections in the November period aren’t as bad as some might have predicted. KU played all its home football games in Kansas City this season, due to renovations at David Booth Kansas Memorial Stadium. This November reporting period was one where people thought the city might take a big hit in sales tax collections, given that the period a year ago included millions of dollars in spending from several home football games.

While a 7% decline is not good, it is not a lot different from many of the other communities in the state. It is basically on par with Wichita — Sedgwick County — and it is better than Olathe. A loss of home football games didn’t have anything to do with lower numbers in those communities.

Maybe Lawrence’s efforts to attract people to town despite the lack of football have been successful, or maybe football spending is still a small enough portion of the overall Lawrence economy that its impact on the overall numbers is a bit muted. Or, perhaps, the impact just isn’t showing up yet in the numbers. I wouldn’t rule out an unpleasant surprise in the December numbers.

But let’s live in a glass-half-full world for a moment. What will it take in the December report for Lawrence to meet its budget? Sales tax collections for the December 2024 reporting period — basically November sales — would need to be more than 15% higher than the December 2023 reporting period.

We might need a shorter glass if we want to remain in this glass-half-full world. Lawrence certainly has had monthly increases of more than 15%, but they aren’t very common. We will know in about a month.

One thing to keep in mind, however, is that Lawrence isn’t having a terrible retail year compared with other major retail centers in the state. Lawrence is in the middle of the pack. It is just that Lawrence’s numbers aren’t as good as what budget-makers had hoped. Here’s a look at the year-to-date sales tax numbers of Lawrence and other big retail markets. The numbers include only traditional sales tax collections, not the special use tax collections:

• Shawnee: up 1.9%

• Kansas City: up 1.0%

• Topeka: up 0.9%

• Olathe: up 0.9%

• Lawrence: up 0.5%

• Merriam: down 0.4%

• Salina: down 0.6%

• Lenexa: down 1.1%

• Sedgwick County: down 1.2%

• Statewide: up 1.0%

It also is worth remembering that disaster will not strike the city’s budget if it ends the year with a shortfall in the $800,000 to $1 million range. The city already has made some adjustments to its budget to account for lower revenues. A further miss most likely will mean that the city holds off on some expenses until the new year, or it starts the new year with a bit less in cash reserves than what it intended.

But, it will be unwelcome news at City Hall if Lawrence sales tax collections finish 2024 with growth of about 1%. It will create questions about the feasibility of the 2025 budget, which expects sales taxes to grow by 3.2%. It also creates added difficulty in figuring out how to project sales tax growth going forward. The city will be crafting its 2026 budget in the summer of 2025. The city would love to pencil in 5% growth in sales tax revenues, but it is becoming harder to see how that would be responsible.

City residents should care because a slowdown in sales tax revenues will put pressure on City Hall to do a couple of things: raise property tax rates, cut city services or some combination of both.