Why Are We Talking So Much About Sales Tax?
Over the past several months, we’ve had many conversations about the proposed STAR Bonds district. Thank you to everyone who has taken the time to ask questions and share your perspective.
One topic comes up again and again: sales tax.
Is Lawrence collecting enough of it? What happens when residents shop outside the city? And how could projects like Beacon Landing and The 1059 affect the city’s long-term financial picture?
This newsletter takes a closer look at those questions. We’ll explore what current city and state data tell us about Lawrence’s retail economy, why sales tax plays such an important role in funding city services, and how attracting more shoppers, visitors, and residents could help strengthen Lawrence’s future.
A Thought Occurred to Us... As we prepared this newsletter, one question kept coming to mind:
This Week’s Topic: What if Lawrence has a shopping sickness?
It’s an unusual way to think about a local economy, but it helps frame the conversation. Every illness has symptoms. The important question isn’t whether we notice the symptoms. It’s whether we understand what’s causing them.
Let’s Start with the Symptoms
Recent city and state data suggest Lawrence’s retail economy is under pressure.
According to the Kansas Department of Revenue, Lawrence is the only one of Kansas’ eleven largest metropolitan areas reporting lower year-to-date city sales tax collections in 2026 than during the same period last year. At the same time, Lawrence has experienced modest population growth, relatively little new retail construction over the past decade, and increasing pressure on the city budget as the cost of providing public services continues to rise.
None of these facts, by themselves, explain why this is happening. But together they raise an important question:
Why isn’t more retail spending staying in Lawrence?
One Possible Cause
One possible explanation is that Lawrence residents are spending a significant amount of their shopping dollars somewhere else. Sometimes that’s because people shop online. Other times it’s because they travel to Lenexa, Olathe, Topeka, or Kansas City to visit stores or attractions that aren’t available here.
Economists call this retail leakage. It simply means purchases that could have been made in Lawrence are being made somewhere else.
During a Lawrence Planning Commission meeting in 2023, testimony based on market analysis estimated that Lawrence residents spend approximately $215 million each year on retail goods and services outside the city.
No community can keep every shopping trip at home, nor should it try. But when residents regularly leave town because they can’t find what they’re looking for locally, Lawrence misses opportunities for local businesses, local jobs, and the sales tax revenue that helps fund city services.
What Can Lawrence Do?
If retail leakage is part of the challenge, how can Lawrence improve its economic health?
Of course, no city can force people to shop at home, nor should it. People will always travel, shop online, and seek out unique destinations. The better approach is to give people more reasons to choose Lawrence. That starts with three practical ideas.
Keep more shopping in Lawrence. Give residents more shopping choices so they can find what they need without leaving town.
Bring more shoppers to Lawrence. Regional shopping destinations, sports, recreation, and entertainment attract visitors who also dine, shop, stay overnight, and support businesses throughout the community.
Grow Lawrence’s customer base. More housing means more residents supporting local businesses and strengthening the city’s long-term sales tax base.
Where Do Beacon Landing and The 1059 Fit?
This is where we believe Beacon Landing and The 1059 can help. Together, the projects are designed to support all three opportunities by expanding shopping choices, creating regional destinations, and adding new housing.
Just as importantly, they’re not intending to shift shopping from one part of Lawrence to another. We do not see retail sales as a fixed-sized pie that has to be divided up among many businesses, we’re intending to bake a much bigger pie with plenty for all.
Every shopping trip that stays in Lawrence instead of leaving town helps local businesses. Every visitor who chooses Lawrence instead of another community brings new dollars into our economy. Every new resident becomes a customer for businesses across the city.
A stronger sales tax base benefits everyone. It helps support the streets we drive on, the parks we enjoy, the public safety services we depend on, and the quality of life that makes Lawrence a special place to live.
A healthy city isn’t built by one development, one retailer, or one neighborhood. It’s built by creating more reasons for people to live here, visit here, and choose Lawrence when it’s time to shop.
K-10 Development Group wants to be part of that solution. We believe thoughtful investment in housing, retail, recreation, and regional attractions can help strengthen Lawrence’s economy while benefiting businesses and neighborhoods across our community.
Thank you for staying with us through this deeper dive into sales tax. We know this was one of our longer newsletters, but it’s an important topic that deserves more than a quick headline. We appreciate your interest, your questions, and your willingness to explore these ideas with us.
