Fort Smith board approves $1.53 million budget cut

The Fort Smith board of directors on Tuesday (July 20) approved budget cuts of more than $1.53 million to address a growing shortfall in revenue that now stands at more than $412,000.

The biggest part of the budget cut involves a $1,176,470 reduction in payments into the city’s health and wellness fund. The fund has a more than $6 million surplus and “there is sufficient money” to afford the temporary reduction, City Finance Director Kara Bushkuhl told the board during their Tuesday evening regular meeting.

City Director Andre Good said he received concerns that employee matching funds would be redirected as part of the process. Bushkuhl said that is not true, with the reduction affecting only city funds.

A hiring freeze on 10 vacant positions will pull another $353,610 from the budget, and no longer providing meals at board study sessions will save an estimated $1,700 a year.

The city faces a $412,117 shortfall in the general budget. The shortfall is likely to grow between the June-December period. Bushkuhl has said the declines are the result of a 9.4% year-to-date dip in county sales tax revenue and an 18.7% dip in franchise fees. The sales tax collection declines reflect a recession-induced slowdown in consumer spending, and the franchise fee dip results from lower rates and usage of natural gas and electricity.

An actuarial study of the wellness fund is underway to better determine the required rate of contributions into the fund. The study will ensure the fund is adequately funded without creating a surplus that may unnecessarily drain funds out of the general operating fund, according to a recent interview with Deputy City Administrator Ray Gosack.