Fort Smith tax revenue dips in May report, down year-to-date

Sales tax revenues for the city of Fort Smith were down in May, with what appeared to be a narrowing of the revenue gap from the previous month's report evaporating.

The city's sales taxes (1% for streets and 1% combined for water and sewer projects and fire and parks and recreation) collected $3.005 million in the May report, 7.4% lower than budgeted.

Overall for the first five months of the year, revenues from the city's sales tax collections are 1.08% below last year's totals for the same period.

The total in the May report represents a drop of 3.43% under budget. (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 May are from taxes collected in March and transferred by merchants to the state in April.)

Collections so far in the 2014 reporting period of the two taxes were $16.363 million, where the same period in 2013 saw collections of $16.542 million. The same period in 2012 saw $16.769 million with $16.148 million in 2011. The city sales tax for fire and parks did not begin collecting revenues until November 2012.

Total collections of the Fort Smith city sales taxes in 2013 was $38.938. Collections in 2012 totaled $39.21 million, just ahead of the $38.684 million collected in 2011. The 2011 collections were 3.9% above the 2010 revenues of $37.23 million.

Fort Smith's share of the countywide 1% sales tax in the May report was $1.151 million, down 7.04% from May 2013 when the city's share of the county sales tax revenues was $1.238 million. The figure was also 7.48% below revenue estimates of $1.244 million.

The countywide tax generated $15.353 million for Fort Smith during 2013, up 0.49% compared to 2012 and down 1.99% compared to budget forecasts. The countywide tax generated $15.279 million in 2012, just ahead of the $15.15 million in 2011, but lower than the peak collection of $16.61 million in 2008.

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 supports fire, police and other critical city functions. The dip in collections compared to budget estimates has resulted in city officials seeking 4% budget cuts from all departments.

A call to Bushkuhl seeking comment for this story was not returned, though in an e-mail to city administration, department heads and the city's Board of Directors, she said possible cuts in the city's budget would be evaluated.

"The state has not loaded the May receipts for 2014 on the website," she wrote. "As soon as the numbers are posted, I will review other cities’ trends for the year and review the commodities listings to see if anything stands out as a reason for the decrease."

When signs of a decline in revenues started to show in May following the release of the March report, Bushkuhl said other revenues could make up the shortfall.

"Although the sales taxes are still below budget, the additional franchise fee revenues cover the shortfall and there does not need to be an adjustment to the General Fund budget at this time," she said. "The fire and parks department programs that are supported by the ¼% sales tax may need to adjust their budgets by approximately $23,000 if the sales tax trend continues. This reduction is less than 1% of each program’s budget for the year."

PREVIOUS ANNUAL COLLECTION INFO
Fort Smith 2% sales tax collection (1% for streets; 1% for water/sewer bonds)
2013: $38.937 million
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
2013: $15.353 million
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