Springsted Incorporated

4698 Honeygrove Road, Suite 4

Virginia Beach, VA  23455

Tel:  757.422.1711

Fax:  757.422.6617

www.springsted.com

 

 

 

 

 


August 3, 2006

 

 

 

Mr. Dave Corliss, Interim City Manager

City of Lawrence

City Hall, 6 E. 6th Street

Lawrence, KS 66044

 

Dear Mr. Corliss:

 

SUBJECT:  ANALYSIS OF 2006 SALES AND USE TAX PROJECTED REVENUES

 

You have requested that Springsted advise you on 2006 sales tax receipts from both the City Sales Tax and the City’s share of the County-wide Sales Tax.  We have reviewed historical information provided by the City’s Finance Director, Mr. Ed Mullins, as well as relevant information maintained by the Kansas Department of Revenue concerning monthly sales tax distributions since 1995 through July 2006.  We performed regression analysis and other analytical techniques to develop a conservative estimate of 2006 annual sales tax receipts. 

 

The table below shows the various sales tax revenue amounts used by the City of Lawrence to formulate the 2007 Recommended Budget.  It also shows our projection of sales tax revenues for 2006.

 

Table One

 

2006
Budget

2006 Projection in
07 Rec. Budget

2006 Projection
revised 7/31

Springsted
2006 Projection

City Sales Tax

12,000,000

12,358,441

12,490,000

12,220,223

City Use Tax

    800,000

     917,883

     920,000

     897,450

County Sales Tax

 7,480,000

  8,217,189

  8,150,000

 8,065,595

County Use Tax

    600,000

     677,318

    640,000

    652,911

TOTAL

20,880,000

22,170,832

22,200,000

21,836,179

 

The 2006 projection used in the 2007 Recommended Budget is different than the revenues in the 2006 Budget because sales tax was underestimated as a means to achieve the maximum  5% budgeted fund balance allowed by statute.  Our analysis examines PROJECTIONS rather than BUDGETED figures.  

 

Table One below summarizes annual sales tax receipts for the period 1996 through 2005, including the annual growth rate during this period.  No annual growth rate was computed for the County Sales Tax in 1996 because the tax was enacted in 1995 and, therefore, collections in that year were not for a complete 12 month period.  Any comparison between 1996 and 1995 would be exaggerated and misleading.

 

Table Two

City of Lawrence Sales Tax Receipts

& Growth Rates

               

 

Receipts

 

Percentage Change

Year

County Sales Tax

City Sales Tax

County

City

1996

$5,320,044

$8,367,356

n/a

-0.7%

1997

$5,745,283

$8,909,583

8.0%

6.5%

1998

$6,197,485

$9,674,389

7.9%

8.6%

1999

$6,321,402

$10,174,313

2.0%

5.2%

2000

$6,967,930

$10,348,072

10.2%

1.7%

2001

$7,076,972

$10,739,915

1.6%

3.8%

2002

$6,998,303

$10,789,837

-1.1%

0.5%

2003

$7,145,700

$10,914,097

2.1%

1.2%

2004

$7,605,913

$11,438,872

6.4%

4.8%

2005

$7,869,536

$11,841,826

3.5%

3.5%

 

The average annual growth rates for this period are 4.6 percent for the City Sales Tax and 5.3 percent for the County-wide Sales Tax.  The range of growth rates from low to high are as follows:

 

City Sales Tax                      -.7 percent in 1996 to 8.6 percent in 1998

County Sales Tax                -               1.1 percent in 2002 to 10.6 percent in 2000

 

Table Three characterizes the City’s share of the County-wide Sales Tax.   It indicates that the City receives approximately 60 percent of the County-wide Sales Tax.  This has been consistently the case since 2000.  Table Four summarizes estimated taxable sales in the County and City for the period 2000 through 2005. The City of Lawrence accounts for approximately 90 percent of all taxable sales in Douglas County.  In 2005, taxable retail sales totaled approximately $1.314 billion in the County, of which $1.184 billion were attributable to the City. In 2005, the County received approximately $13.1 million of which the City received $7.8 million.

 

 

Table Three

 

City/County Sales Tax Yield For 2000 to 2005

Year

City

County

City Share

% of Total

2005

$11,841,816

$13,145,214

$7,869,534

59.9%

2004

$11,438,872

$12,675,467

$7,605,914

60.0%

2003

$10,914,096

$11,968,877