Fort Smith tax revenue up in September report, still off budget estimates

September marked four months straight that Fort Smith sales tax collections have surpassed the same month last year, but the increase in collections has not helped the city improve its revenues enough to be even with budget projections for the year.

The city's sales taxes (1% for streets and 1% combined for water and sewer projects and fire and parks and recreation) collected $3.456 million in the September report. The figure is 6.52% above September 2013 and 3.98% ahead of budget projections for the month of September.

For the first nine months of the year, the total tax collections including the September report from the city's sales tax collections are up 1.94% but below budget projections by 0.49%. The nine month total is an improvement from August's report for the first eight months of the year, when the budget was down 1.04%.

(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.)

Collections so far in the 2014 reporting period of the city's sales taxes were $30.086 million, up from collections of $29.515 million during the same period in 2013. The same nine months in 2012 saw collections of $29.876 million, while the period in 2011 saw collections of $29.079 million. The city sales tax for fire and parks did not begin collecting revenues until 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 sales tax in the September report was $1.333 million, which was an increase of 4.22% over $1.279 million in September 2013. The figure was also 3.73% above a budget of $1.285 million for this month.

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.

"For the 9 months, the county tax is 0.02% above last year and 0.45% below budget," said city of Fort Smith Finance Director Kara Bushkuhl in an email to the city's Board of Directors.

She further reported franchise fee collections of $4.948 million as of Oct. 27, which she said was on track to meet a revised budget of $6.614 million for the year.

Property taxes collected as of Oct. 27 totaled $3.477 million to the benefit of the general fund.

"This revenue source is expected to meet the revised budget estimate for 2014 of $6,854,602," she added.

The report and its totals being flat for the year's budget comes the day after the Board met for a brainstorming session to address funding issues that could lead to layoffs and the possibility of no pay raises for city staff. In the meeting, city directors proposed raising franchise fees and cutting expenses in an effort to meet budgetary demands on the city, which include properly funding a fire and police pension contribution fund that is expected to go broke as soon as 2019.

A proposal made during a Tuesday (Oct. 28) study session of the Board could have voters deciding on reallocation of a portion of the street sales tax moneys next year to benefit the pension fund. Voters would first have to vote to renew the 1% sales tax for streets. Other questions on the ballot would ask about reallocation of funding should the sales tax be renewed.

A vote by the Board on whether to allow the ballot questions to go to voters could come as early as January 2015.

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