Fort Smith tax revenue declines in August report

Fort Smith sales tax collections and the city’s share of the 1% countywide sales tax both posted the largest year-over-year declines in the city’s August report.

The report indicates a decline in July commerce in the city and Sebastian County.

Each of the city’s 1% sales taxes (1% for streets and 1% for water and sewer projects) collected $1.607 million in the August report, down 3.07% from the same period in 2011. The collections were down 2.51% 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 2012, each of the 1% sales taxes generated $13.293 million, 2.58% above the 2011 period and 3.17% more than budgeted.

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 August report is $1.229 million, down 5.98% compared to August 2011, and the second consecutive month of declines for the county tax. The collection was down 6.49% compared to the revenue estimate. For the first eight months of 2012, the countywide tax has generated $10.347 million for Fort Smith, up just 1.87% compared to 2011 and up 1.19% over 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.

Fort Smith Administrator Ray Gosack said the size of the percentage decline, especially with the countywide collection, got his attention.

“There is some concern. The decline could possibly be a result of the Whirlpool layoffs, but we’ll look at a few more months and see if that decline continues,” he said.

“What is concerning is that the countywide sales tax is declining faster” than the city decline, suggesting that rural areas are being hurt to a greater extent than Fort Smith by ongoing economic problems, Gosack explained.

The Fort Smith Board of Directors and city officials are working now to prepare the 2013 budget.

Fort Smith’s franchise revenue through Sept. 24 totaled $2.948 million, or 47.6% of the 2012 estimated revenue of $6.191 million. The city’s revenue from ad valorem revenue totaled $4.475 million, down from $5.061 million for roughly the same period in 2011.

PREVIOUS ANNUAL COLLECTION INFO-FORT SMITH
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-FORT SMITH
2011: $11.458 million
2010: $11.105 million
2009: $10.092 million
2008: $9.381 million

FORT SMITH 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%)