photo by: AdobeStock

If Lawrence’s economy was a race car, its pit crew would be getting a little more anxious with each passing lap. Their car is falling slightly farther behind as the race nears a critical stage.

That’s certainly one way to look at the latest sales tax numbers released by the Kansas Department of Revenue. The June report showed sales tax collections were lackluster for the one-month period, which caused Lawrence to lose ground on its important budget goal of posting 5% growth in sales tax collections for the year.

If you want to keep this simple: Lawrence’s economy started the year very fast, but has basically been slowing ever since. During the February reporting period Lawrence posted an 18% increase in sales tax growth, and the city was easily on track to hit its 5% growth mark.

Now, it is not. Lawrence’s retail sales through June were up 4.1% in 2025, compared to the same period a year ago. Rewind one month ago, and Lawrence retail sales through May were up 4.5% for the year. In other words, the city wasn’t quite on pace to hit its 5% goal one month ago, but was within striking distance. Today, the city is still within striking distance, but the lift got a little bit heavier after a slow June.

Retail sales in Lawrence grew by 1.6% in the June reporting period, which primarily reflects sales made in parts of April and May. Any growth is good, but the 1.6% rate won’t be enough for the city to meet its 5% goal. If that is the new normal for 2025, the city will fall significantly short of its goal.

Hitting that 5% goal is important because anything less will add to Lawrence’s budget challenges, which already are significant. The city estimates it will have an approximately $6.5 million budget hole to fill for the 2026 budget, which will be crafted this summer.

But, are the June numbers really cause for concern? After all, we’re only halfway through the year. The rest of the year may see growth at a rate greater than 1.6%. In sum, the halfway point of a race generally isn’t that critical to its outcome.

However, when it comes to creating a budget for cities in Kansas, the rules have an interesting twist: Basically, near the halfway point of the race, you have to build your car for the next race.

The City Commission will start crafting the 2026 budget next month. A key component for crafting the budget will be estimating how much sales tax revenues will grow in 2026. Sales tax revenues are the No. 1 funding source for the city’s operating budget. The best information the city has for how sales taxes will perform in 2026 is basically to look at how they are performing thus far in 2025. That’s why the lackluster 1.6% growth rate in June may be at least a nagging thought among City Hall budget-makers. Given that three of the last four monthly reports haven’t been strong also is a reason for caution as city leaders set the budget number.

On the other hand (or perhaps foot, in this case,) Lawrence is expected to be a host city for a base camp for the World Cup soccer tournament. If that event brings lots of international tourists to Lawrence to follow their World Cup team, Lawrence sales taxes may get a great boost in 2026.

We’ll be watching how those calculations unfold as city commissioners do their best to predict the future during the upcoming budget sessions. In the meantime, here’s a closer look at the numbers from the recent past.

First, here’s a look at the June numbers. Lawrence retail sales were up 1.6% for the month. That is slower than the state as a whole, which posted growth of 3.8%, compared to the same period a year ago. Given that, it is not too surprising that Lawrence also ranks in the bottom half of the state’s major metro markets that we track, shown below.

• Manhattan: up 11%

• Merriam: up 9.4%

• Olathe: up 7.1%

• Sedgwick County: up 6.5%

• Topeka: up 6.1%

• Salina: up 5.5%

• Lawrence: up 1.6%

• Shawnee: up 0.6%

• Kansas City: down 0.9%

• Lenexa: down 2.2%

While Lawrence lately has been lagging the rest of the state in terms of retail sales growth, the city is still above the statewide average, thanks to that monster February. But, not by much, at this point. Here’s a look at those year-to-date figures.

• Merriam: up 6.8%

• Manhattan: up 5.9%

• Sedgwick County: up 4.2%

• Lawrence: up 4.1%

• Salina: up 3.6%

• Topeka: up 3.3%

• Olathe: up 1.8%

• Shawnee: up 1.1%

• Kansas City: up 0.3%

• Lenexa: down 1.1%

• Statewide: up 3.9%

Given that we now have six of the 12 monthly reports in hand, we might as well look at how some other area towns are faring with sales tax collections. Here’s a look at year-to-date totals, compared to the same period a year ago.

• De Soto: up 24.2%

• Perry: up 15.6%

• Spring Hill: up 9.2%

• Overbrook: up 8.3%

• Oskaloosa: up 7.4%

• Basehor: up 7.3%

• Bonner Springs: up 5.1%

• Gardner: up 4.7%

• Lecompton: up 3.6%

• Baldwin City: up 3.3%

• Tonganoxie: up 0.7%

• Wellsville: down 3.8%

• Eudora: down 4.7%

• Leavenworth: down 4.5%