Fort Smith 1% tax collection up 3.4% in May

The good news for the Fort Smith city budget is that the May sales tax collection report showed gains of the city’s 1% collections and the city’s portion of the countywide tax.

Each of the city’s 1% sales taxes (1% for streets and 1% for water and sewer projects) collected $1.608 million in the May report, up 3.4% from the same period in 2010. The collections were up 1.88% compared to budget estimates. (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 June are from taxes collected in April and transferred by merchants to the state in May.)

The May report was the seventh consecutive month of year-over-year gains for the city tax collections. Not since the February 2009 report ended a nine-month string of year-over-year gains have Fort Smith sales tax collections posted so many consecutive monthly gains.

For the first five months of the year, each of the city’s 1% sales taxes collected $8.074 million, up 3.26% compared to the 2010 period and 1.74% above budget forecasts.

Fort Smith’s share of the county 1% sales tax in the May report is $1.257 million, up 0.04% compared to May 2010. The collection was down 2.78% compared to the revenue estimate. For the first five months of 2011, the countywide tax has generated $6.337 million for Fort Smith, up a scant 0.49% compared to 2010 and down 2.35% compared to budget forecasts.

“The decrease is due to the change in population for Sebastian County. The estimated decrease for the 2011 budget is currently estimated at $220,000,” Kara Bushkuhl, director of finance for the city, noted in the collection memo.

Revenue to the city has averaged 69.8% of the total distribution of the Sebastian County 1% tax. However, the city’s 2010 census population is now about 68.6% of the county’s 2010 census population. Countywide tax proceeds in 2010 totaled $21.348 million, with the city’s share reaching $14.892 million.

The countywide tax collection is critical because the revenue is a little more than 40% of the city’s general budget of roughly $40 million. A majority of the general fund budget general supports fire, police and other critical city functions.

FRANCHISE, PROPERTY TAX COLLECTIONS
Franchise fee revenue recorded in the May report was $1.749 million, up just 0.23% compared to the $1.745 million for the 2010 period.

The revenue, with the largest sources of revenue coming from utility use, is erratic from year to year. In 2010 the revenue totaled $6.492 million, up 8.37% from the $5.99 million in 2009. However, franchise fee revenue in 2009 totaled $7.366 million. (See chart below.)

Companies paying franchise revenue include OG&E, Arkansas Oklahoma Gas Corp. Cox Communications (Fort Smith TV Cable), Arkansas Valley Electric and AT&T.

Property tax revenue through June 14 totaled $3.981 million, flat compared to $3.982 million in the same 2010 period. The city collected $11.105 million from property tax collections in 2010, and $10.884 million in 2009.

City officials estimate property tax revenue will total $12.132 million in 2011.

FRANCHISE FEE REVENUE (with % comparison to previous year)
2010: $6.492 million (8.37%)
2009: $5.99 million (-18.68%)
2008: $7.366 million (8.97%)
2007: $6.76 million (-8.72%)
2006: $7.406 million (8.38%)

PREVIOUS ANNUAL COLLECTION INFO
2% sales tax collection (1% for streets; 1% for water/sewer bonds)
2010: $37.229 million
2009: $37.554 million
2008: $41.226 million
2007: $37.858 million
2006: $36.840 million

Fort Smith portion of 1% countywide sales tax
2010: $14.89 million
2009: $15.04 million
2008: $16.61 million
2007: $15.15 million
2006: $14.71 million