July commerce up in Fort Smith

July commerce in Fort Smith was surprisingly strong, with tax collections up more than 8% compared to 2010.

Each of the city’s 1% sales taxes (1% for streets and 1% for water and sewer projects) collected $1.658 million in the August report, up 8.03% from the same period in 2010. The collections were up 6.43% 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 September are from taxes collected in July and transferred by merchants to the state in August.)

For the first eight reporting months of the year, each of the city’s 1% sales taxes collected $12.959 million, up 3.18% compared to the 2010 period and 1.65% above budget forecasts.

The August report is the highest since August 2008 ($1.831 million) when construction and insurance crews were in the area responding to significant damage from two severe storms.

Also, city’s 1% sales taxes have seen only one month with a year-over-year decline (June 2011 report), and that decline was just 1.04%.

“We’ve not been able to identify any explanation for why it was so high,” City Administrator Ray Gosack said of the large increase in taxes from July sales. He did say higher water and utility sales during the sweltering days of July could have been a factor.

Gosack said the collection rate was a nice surprise considering the news of jobs layoffs and the possible closure of Whirlpool’s Fort Smith plant. He feared the economic turmoil would have more of a “chilling effect on people’s confidence in the local economy.”

Indeed, the recent The Consumer Compass Report shows a clear decline in sentiment about personal finances and the health of the overall regional economy. According to the survey conducted Sept. 8, 44% describe their financial situation as worse than one year ago with only 11% saying it is better.

Fort Smith’s share of the county 1% sales tax in the August report is $1.306 million, up 6.18% compared to the August 2010 report. The collection was up 3.19% compared to the revenue estimate.

However, for the first eight months of 2011, the countywide tax has generated $10.157 million for Fort Smith, up 0.42% compared to 2010 and down 2.41% compared to budget forecasts.

The countywide tax collection is critical because the revenue is a little more than 40% of the city’s general budget of roughly $42 million. A majority of the general fund budget general supports fire, police and other critical city functions.

New population figures released in the 2010 Census changed how the countywide tax is distributed. 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 city’s portion of property tax collections as of Sept. 23 totaled $3.052 million, up 1.04% compared to the $2.764 million in the 2010 period. Overall property tax collections to the city total $5.061 million as of Sept. 23, up 1.05% compared to the 2010 period.

Franchise fees as of Sept. 23 totaled $3.233 million, up slightly compared to the $3.211 million in the 2010 period.

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