photo by: Adobe Stock

A sales receipt is shown in this file photo.

Lawrence City Hall budget-makers will take any good news they can these days. The city has about a $6.6 million budget hole to fill for its 2026 budget, and it already has implemented buy-out plans for 20 employees, with more perhaps to come.

As the budget process gets ready to swing into high gear next month, the city got a little bit of good news in the form of recent sales tax collections, which are the single largest source of revenue for the city’s general operating budget.

The state’s May sales tax report — which covers sales primarily made in parts of March and April — showed retail sales in Lawrence took a big jump up, ending a two-month streak of declining totals.

The report found taxable sales in Lawrence were up 6.1% compared to May 2024 totals. While that is a healthy increase, it actually was a bit behind the state as a whole, which posted a 7.8% increase in local sales tax collections, according to the Kansas Department of Revenue. During the one month period, Lawrence also ranked eighth out of the 10 major metro areas that we track for retail sales. Here’s a look:

• Merriam: up 12.7%

• Salina: up 9.5%

• Manhattan: up 8.5%

• Sedgwick County: up 8.3%

• Lenexa: up 7.3%

• Olathe: up 6.4%

• Shawnee: up 6.2%

• Lawrence: up 6.1%

• Kansas City: up 6.0%

• Topeka: up 4.7%

• Statewide: up 7.8%

But still, a 6.1% increase for the month is nothing to worry about. If city budget-makers could bank on those type of increases for the rest of the year, they gladly would.

The other half of the state’s monthly report, though, suggests that would be unwise. The more meaningful part of the state report is the year-to-date totals because they provide a much better sense of a trend.

With five months now in the books, taxable sales in Lawrence are up 4.5% from the same period a year ago. That number is like a mini-Snickers bar — it is sweet, but you wish there was a little more of it.

In general terms, the city likely needs to see sales tax collections grow by about 5% this year to make its 2025 budget. That 5% growth is over-and-above any new revenue created by the 0.05% sales tax increase voters approved for housing and homeless services that hit the books in April. Hitting the 2025 budget mark is important, or else the $6.6 million deficit for 2026 will grow.

At 4.5% growth, the city is just a bit short of that mark, but certainly within striking distance. Importantly, the May numbers got the city moving in the right direction. Until the May report, the city had posted two straight months of declines, and the 5% goal was getting a little further away each month.

That’s all good, but there is a lot of year left. That is always the problem with sales taxes and city budgets. Employees in the city manager’s office currently are working to create a proposed 2026 budget that will be unveiled next month. A key component of that budget will involve forecasting how much sales tax revenues will grow in 2025, and also what they will do in 2026. Basically, the city will have about five to six months of 2025 data available to them when the recommended 2026 budget comes out. With that five months of data, the city will need to forecast what will happen over, basically, the next 18 months.

That’s a tough task in any year. This year may be particularly fraught because of the uncertain impacts tariffs may have on consumer spending. If prices rise, will consumers buy less? But will they buy less for sales tax collections to actually fall in dollar value? Remember, sales taxes are a percentage of a cost of a good, so as prices rise, so too do collections. Of course, if rising prices are a sign of overall inflation, then the city’s expenses may also rise, meaning it will need more sales tax dollars to cover those costs.

Like I said, a tough task, but thus far, Lawrence budget-makers have some decent numbers to work with. Here’s a look at the year-to-date totals and how they compare to other major retail markets in the state:

•Merriam: up 6.2%

•Manhattan: up 4.9%

•Lawrence: up 4.5%

•Sedgwick County: up 3.8%

•Salina: up 3.3%

•Topeka: up 2.7%

•Shawnee: up 1.2%

•Olathe: up 0.7%

•Kansas City: up 0.5%

•Lenexa: down 0.9%

•Statewide: up 3.9%