Fort Smith tax revenue improves in March report

The March revenue report for the city of Fort Smith brought some welcome news and an end to four consecutive months of tax revenue declines.

Each of the city’s 1% sales taxes (1% for streets and 1% for water and sewer projects) collected $1.614 million in the March report, up 8.92% from the same period in 2012.

The collections in the March report were 5.47% above 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 April are from taxes collected in February and transferred by merchants to the state in March.)

But the city’s budget is still behind estimates. For the first three reporting months of 2013, each of the 1% sales taxes generated $5.04 million, down 1.49% compared to the 2012 period and 4.2% below the budget estimate.

Collections in 2012 of the two 1% taxes totaled $39.21 million, slightly ahead of the $38.683 million during 2011. The 2011 collections were 3.9% above 2010 collections.

The four-month decline (November-February reports) has already caused a need for the city to consider budget cuts. City Finance Director Kara Bushkuhl has said that department heads have been asked to submit cuts of up to 4% for any budgets funded by the general fund.

Budget cutting ideas have already been submitted to the Fort Smith Board of Directors. The Board reviewed the cuts, which included a reduction of almost $600,000 to the police budget, during an April 9 study session.

Budget decisions are more directly impacted by the city’s general fund, which derives revenue from the city’s share of the countywide 1% sales tax. 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’s share of the county 1% sales tax in the March report is $1.259 million, up 8.39% compared to March 2012. The collection was up 5.59% compared to the revenue estimate.

For the first three months of 2012, the countywide tax has generated $3.91 million for Fort Smith, down 1.32% compared to 2012 and down 3.7% compared to budget forecasts.

PREVIOUS ANNUAL COLLECTION INFO
2% sales tax collection (1% for streets; 1% for water/sewer bonds)
2012: $39.210 million
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
2012: $15.279 million
2011: $15.15 million
2010: $14.89 million
2009: $15.04 million
2008: $16.61 million
2007: $15.15 million
2006: $14.71 million