Fort Smith tax collections see double-digit decline

The recession may technically be over but the effects are still hitting hard the coffers of Fort Smith city government.

Each of the city’s one-percent sales taxes collected $1.508 million in September, down 12.1% from the same month in 2008 and down almost 9% compared to budget expectations. (Because the state of Arkansas has a two-month delay in reporting collections back to the cities, the city of Fort Smith — for budgeting purposes — has historically reflected the collections on a one-month delay. Which is to say, the tax collections remitted back to the cities in November are from taxes collected in September and transferred by merchants to the state in October.)

For the first 10 months of 2009, the city sales tax collections are down 7.83%, according to a memo from Fort Smith Finance Director Kara Bushkuhl to City Administrator Dennis Kelly.

“When comparing year to date budget figures, the city sales tax is 5.34% lower than the original projections. The actual revenue reduction for the street sales tax budget and for the sales and use tax bond budget is $898,807 each,” Bushkuhl noted.

The city’s share of the countywide one-percent sales tax in September was $1.211 million, down 14.55% compared to the 2008 period and 6.44% below budget expectations. For the first 10 months of 2009, the city’s portion of the countywide tax is down 7.77% compared to the same period in 2008. The revenue loss to the roughly $40 million general fund budget — which supports fire, police and other critical city functions — is $623,688 to date.

According to an interim The Compass report, national economic conditions are likely to make it more difficult for regional county and municipal governments to provide services. Jeff Collins, the economist for The Compass, suggests local economic conditions may not improve until the second half of 2010.

“Both retail as well as hospitality are likely to lag recovery in the national economy, leaving retailers and hoteliers to look to a better than expected holiday season and a tough first half of 2010,” Collins noted in the conclusion of his report.

PREVIOUS COLLECTION INFO
2% sales tax collection (1% for streets; 1% for water/sewer bonds)
2008: $41.226 million
2007: $37.858 million
2006: $36.840 million

Fort Smith portion of 1% countywide sales tax
2008: $16.61 million
2007: $15.15 million
2006: $14.71 million