Ho, Ho, Hum: Christmas sales in Fort Smith down more than 9.7%

It may have been a white Christmas in most parts of the Fort Smith region, but area consumers remained somewhat Scrooge-ish with their green.

December retail sales in Fort Smith, as measured by sales tax collections, were down 9.7% compared to the same period in 2008. Retail sales in Sebastian County for December were down 8% compared to the same period in 2008.

Each of the city’s 1% sales taxes generated $1.789 million in December, down 9.7% compared to collections in the same period of 2008. (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 to cities in February are from taxes collected in December and transferred by merchants to the state in January. However, the city records the February remittance from the state of taxes collected in December on its January report.)

The city’s portion of the 1% countywide sales tax in December was $1.439 million, down 8% compared to the same period in 2008.

However, City Finance Director Kara Bushkuhl said the state kept a larger share of the tax collections than normal. The state keeps 3% of the collections for its administrative fee, and keeps other amounts based on special circumstances.

“Each month the state reduces the city’s sales tax revenue by the 3% collection fee as well as for adjustments for the month. The adjustments may be refunds for point of sales or calculation errors by a vendor; rebates to companies for exempt sales; and errors by the state due to a change in their computer system. The adjustments usually average $250,000 to $350,000 for the combined 2% collections. However, the adjustments for the past two months exceeded $500,000,” Bushkuhl explained in a memo to city directors and the city administrative staff.

Officials with the Arkansas Department of Finance and Administration do do share details with municipal finance directors about the nature of the withholdings. Bushkuhl and others have in past complained that the DF&A rules make it difficult for cities to make and maintain budget estimates. Past legislative attempts to remedy the lack of transparency have failed.

The only good news to be gleaned from the December tax collections is that the decline moderated from double-digit percentages to single-digits. This may not be enough to prevent future Fort Smith budget cuts. Fort Smith Deputy City Administrator Ray Gosack said in early February that the early numbers show the city is down as much as $800,000 on its roughly $40 million operating budget.

• PAST FOUR MONTHS (with % comparison to 2008 period)
Countywide sales tax collection
December 2009: $1.439 million (-8%)
November 2009: $1.156 million (-13%)
October 2009: $1.048 million (-22.74%)
September 2009: $1.211 million (-14.55%)

Fort Smith sales tax collection
December 2009: $1.789 million (-9.7%)
November 2009: $1.446 million (-12.4%)
October 2009: $1.409 million (-16.44%)
September 2009: $1.508 million (-12.1%)

• PREVIOUS ANNUAL COLLECTION INFO
2% sales tax collection (1% for streets; 1% for water/sewer bonds)
2009: $37.554 million
2008: $41.226 million
2007: $37.858 million
2006: $36.840 million

Fort Smith portion of 1% countywide sales tax
2009: $15.04 million
2008: $16.61 million
2007: $15.15 million
2006: $14.71 million