Lawrence sales taxes lag, online collections rise as budget looms

Lawrence’s sales-tax split is widening, with traditional retail collections down 0.8% year to date even as the city led Kansas’ major retail markets in growth for the special tax on online purchases. Combined retail and use-tax collections were up 2% through midyear, but that gain looks much smaller once inflation is factored in.

That shift matters at City Hall because sales taxes provide almost half of the revenue for general city expenses. Lawrence’s 2026 budget assumed about $57.2 million in sales-tax collections, up from about $56.3 million in 2025, a modest increase of roughly 1.6% that leaves little room if shoppers keep moving spending away from local storefronts.

The June 10 sales-tax update showed Lawrence was the only one of 11 major retail markets tracked in Kansas that had posted a decline in traditional retail sales for the year. In the same period, the city was performing worse than any other major retail market in the state on traditional sales-tax collections, even as online-related collections continued to rise. For downtown merchants, the numbers suggest a familiar pressure point: physical sales are soft while more purchases are being routed through delivery and digital checkout rather than local cash registers.

The tax structure helps explain why the shift is so important. Lawrence’s city sales tax totals 1.60%, made up of 1.0% for general operations and 0.60% in special sales taxes that began April 1, 2019, were amended April 1, 2025, and are scheduled to sunset after 10 years. Shoppers in Lawrence also pay Kansas’ 6.50% state sales tax and Douglas County’s 1.25% local sales tax, a combined burden that makes where people buy as important as what they buy.

City budget materials show Lawrence’s 2026 budget was adopted in September 2025 after a process that began the previous summer. The city’s budget calendar and sales-tax page make clear why finance staff watch the monthly numbers so closely: when sales soften at local stores, there is not much else in the general fund that can quickly make up the difference.

Kansas Department of Revenue monthly distribution reports for May and June 2026 continue to track those local collections, and Lawrence’s latest figures suggest the city’s growth story is increasingly tied to how quickly shoppers move online rather than how much they spend in neighborhood storefronts.