Fort Smith tax revenue down in May report

Two months of declines in Fort Smith sales tax collections could be an early sign of consumer concern about the future of the Fort Smith regional economy.

Each of the city’s 1% sales taxes (1% for streets and 1% for water and sewer projects) collected $1.591 million in the May report, down 1.04% from the same period in 2011. The collections were down 0.47% 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.)

Fortunately, a strong start to the year provided some cushion for the city. For the first 5 reporting months of the year, each of the city’s 1% sales taxes collected $8.384 million, up 3.84% compared to the 2011 period and 4.4% above budget forecasts.

Collections in 2011 of the two 1% taxes totaled $38.683 million, ahead of the $37.229 million during 2010 and ending a two-year decline in tax collections.

Fort Smith’s share of the county 1% sales tax in the May report is $1.256 million, down 0.06% compared to May 2011, and the third consecutive month of declines for the county tax. The collection was down 0.74% compared to the revenue estimate. For the first five months of 2012, the countywide tax has generated $6.53 million for Fort Smith, up 3.04% compared to 2011 and up 2.35% 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.

Franchise fees — which totaled $1.591 million as of June 22 — are still coming in under budget estimates for the city.

“At the current rate of payments from the franchised companies, the total revenue for 2012 may be approximately $170,000 below the original budget estimate. Once the second quarter payments are received (August 15, 2012), there will be a better projection of expected revenues,” Kara Bushkuhl, Fort Smith’s director of finance, noted in her report.

The number of employed during April was an estimated 118,843, above the 116,742 during March but down 3.38% compared to the 123,006 employed in the region during April 2011.

And according to the recent The Compass Report, first quarter 2012 economic conditions in the Fort Smith metro area remained flat compared to the 2011 period, with an ongoing decline in overall employment and building permit values weighing negatively on continued gains in regional sales tax collections.

PREVIOUS ANNUAL COLLECTION INFO
2% sales tax collection (1% for streets; 1% for water/sewer bonds)
2011: $38.683 million
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
2011: $15.15 million
2010: $14.89 million
2009: $15.04 million
2008: $16.61 million
2007: $15.15 million
2006: $14.71 million

PROPERTY TAX (ad valorem) REVENUE
2011: $11.458 million
2010: $11.105 million
2009: $10.092 million
2008: $9.381 million

FRANCHISE FEE REVENUE (with % comparison to previous year)
2011: $6.571 million (1.23%)
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%)