Declines continue for Fort Smith tax revenue

Sales tax revenue in Fort Smith continues to head in the wrong direction, with the June report showing revenue down more than 4% compared to budget expectations. June also marked three consecutive reports in which collections were down compared to 2012.

Each of the city’s 1% sales taxes (1% for streets and 1% for water and sewer projects) collected $1.608 million in the June report, down 1.22% from the same period in 2012, and 4.18% below 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 July are from taxes collected in May and transferred by merchants to the state in June.)

For the first six reporting months of 2013, each of the 1% sales taxes generated $9.879 million, down 1.33% compared to the same period of 2012, and 4.17% 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.

Fort Smith’s share of the county 1% sales tax in the June report is $1.253 million, down 4.03% compared to June 2012. The collection was down 6.37% compared to the revenue estimate.

For the first six months of 2013, the countywide tax has generated $7.678 million for Fort Smith, down 2.01% compared to 2012 and down 4.39% 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. The dip in collections has resulted in city officials seeking 4% budget cuts from all departments.

“We still think that will get us there,” Assistant City Administrator Jeff Dingman said Tuesday (July 23) when asked if the 4% cuts would be enough.

Dingman said city officials also rely on the “unspent portions” of the budget to respond to the decline in collections.

Statewide, June revenue from sales and use collections, typically a sign of consumer spending and confidence, reached $183.9 million, up 3.1% compared to June 2012, but below the state budget forecast by 0.9%. For the state’s fiscal year (July 2012-June 2013), sales and use tax collections totaled $2.124 billion, up just 1.1% compared to the 2012 period, and 1.4% below forecast.

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