photo by: Adobe Stock

A sales receipt is shown in this file photo.

It has been a slow start to a new year in Lawrence.

Retail sales in the first quarter of the year are down in Lawrence compared to a year ago, and numbers from the Kansas Department of Revenue show Lawrence is the only major retail market in the state to have posted such a decline.

Reasons for the dip aren’t clear. The state’s monthly reports don’t provide any commentary on why totals are up or down, and divining such matters always involves a fair amount of guesswork.

However, it is worth noting that Lawrence had unusually large sales tax collections to begin 2025. It was never clear why Lawrence had such a spike in sales tax collections in the first quarter of last year — some months were up as much as 18% — but it seems clear now that whatever happened a year ago didn’t repeat itself.

Lawrence has now received three of its 12 monthly sales tax disbursements from the Kansas Department of Revenue, and they show that retail sales in Lawrence are down 1.3% from the same period a year ago.

There’s a natural lag in how long it takes the state to process sales tax results, so the first quarter numbers don’t actually represent sales made through March. Rather, they are more likely to capture sales made through mid-December to mid February. Thus, the slowdown wouldn’t be related to any consumer pullback in response to rising gas prices and the military conflict in Iran, for example.

Rather, the slowdown appears to be more specific to Lawrence. The 1.3% decline in Lawrence retail sales compares to an average statewide increase of 3.8%. In addition, I regularly track the sales tax totals for 10 of the largest retail markets in the state, and Lawrence was the only one in the group to post a decline.

Here’s a look at those first quarter numbers:

• Manhattan: up 9.9%

• Lenexa: up 9.0%

• Kansas City, Kan: up 7.6%

• Sedgwick County: up 7.1%

• Salina: up 5.6%

• Shawnee: up 5.5%

• Merriam: up 3.6%

• Olathe: up 2.5%

• Topeka: up 1.8%

• Lawrence: down 1.3%

• Statewide: up 3.8%

Sales taxes are tremendously important to the City of Lawrence’s budget — they’re the largest source of funding for general operations — but they also are volatile and hard to predict. That makes them prone to overreactions. The fact Lawrence has started the year out slow isn’t a major cause for worry, as there’s still plenty of time in the year for the trend to reverse itself.

There are a couple of other factors particular to this year to keep in mind. Factor No. 1: The first quarter of this year is basically the equivalent of chips and salsa. The big enchilada this year comes in the summer. The World Cup soccer tournament is expected to bring thousands and thousand of people to Kansas City and Lawrence for an extended period. Sales taxes should be piling up from hotel stays to restaurant purchases.

Factor No. 2: City Hall budget-makers have been much less aggressive in their sales tax expectations than past years. The city’s 2026 budget calls for $57.2 million in sales and use tax collections in 2026. The city in 2025 collected $56.2 million in sales and use taxes. (A use tax is a special sales tax that primarily impacts online purchases.) That means the city is only counting on a 1.7% increase in sales and use tax collections this year. The past several years, the city has been counting on increases closer to 5%, and a few times, were banking on increases significantly larger than that.

So, while the year has started off slow for reasons that aren’t yet clear, the city’s overall goals are still well within reach.

Sales tax collections are important for most other area cities, and the figures are a good way to gauge how some of the smaller economies in the region are performing. With that in mind, here’s a look at first quarter numbers for several area cities:

• Basehor: up 18.3%

• Bonner Springs: up 18.2%

• Baldwin City: up 16.1%

• Wellsville: up 10.9%

• Eudora: up 9.6%

• Gardner: up 9.2%

• Leavenworth: up 1.6%

• Spring Hill: down 0.1%

• Jefferson County: down 1.2%

• Ottawa: down 1.5%

• Perry: down 5.2%

• Tonganoxie: down 8.0%

• Overbrook: down 15.8%

• De Soto: down 22.4%

• Lecompton: down 34.6%

Of note is the big decline in sales tax collections in De Soto, which is home to the multi-billion dollar Panasonic battery plant that has been under construction for several years. De Soto has seen its sales tax collections soar during the past couple of years. Now, as construction activity on the plant begins to wind down, you’re seeing a pullback in spending as fewer construction materials are being purchased and fewer works are in the community. Make no mistake, though, the amount of sales taxes collected in De Soto is still way above what the city was collecting before the Panasonic plant was announced.

Records show that prior to the plant announcing its plans to locate in De Soto, the city averaged about $4 million a month in retail sales. During the last quarter, even after the slowdown, De Soto averaged about $9.5 million a month in retail sales.