‘Anomaly’ causes Fort Smith sales tax revenue to spike in October report

Fort Smith city sales tax collections spiked 44% in October 2016 compared to the same period last year, but City Finance Director Jennifer Walker warned the large increase “should not be considered a trend.”

In a memo to Mayor Sandy Sanders, City Administrator Carl Geffken, department heads, and the Board of Directors on Tuesday (Nov. 29), Walker called the increase an “anomaly” brought on by “the very large amended tax return that was filed in October 2015 by a company outside the city limits that had previously been reporting and paying city sales tax.”

One-cent street tax revenue for the month of October 2016 was $1.772 million, 44.41% above the October 2015 report and 3.6% above revised budget estimates enacted more than three months ago by the Board to account for lower-than-anticipated revenues.

Year-to-date, overall revenues (street, bond, park/fire) are $35.477 million, 4.7% above last year’s total and $595,907, or 1.7%, above the revised budget.

The total adjusted budget reduction resulting from the Aug. 16 Board of Directors meeting was $1.41 million. Street sales tax took the biggest hit with a $650,200 reduction while bond Issues were next at $495,900. Fire and Parks revenue estimates also fell by $132,150 apiece.

The October report reflects tax collections on August sales.

COUNTY SALES TAX REVENUES
The city’s share of the county sales tax for October 2016 was $1.376 million, 5.6% more than last October’s $1.303 million and 4.3% above revised budget. The city’s share of county sales tax YTD for 2016 is $13.888 million, or 3.5% above last year’s $13.414 million and 1.8% above budget.

“Total revenue to date is $247,181 more than the revised budget estimate. County sales tax 2016 is now trending slightly above budget and forecasts year-to-date,” Walker said.

County revenue funds police, fire, city administration and other critical services.

Lastly, franchise fees continue to run below expectations. Fees are 23% below budget.

“Most of this is due to timing of payments,” Walker explained in the memo. “We are estimating coming in at year end approximately 8% below budget, or $500,000. This shortfall will be offset by County Sales Tax overages (expected $300,000 excess by year end) and lower than budget spending in the General Fund ($200,000+).”

A large part of the deficiency shows actual revenue from OG&E in the amount of $2.884 million against an estimated revenue of $3.6 million. AOG also ran below expectations with a $537,698 actual against an estimate of $1.202 million. Walker promised a “more in-depth review of these two revenues” at budget hearings beginning Nov. 29.

PREVIOUS ANNUAL SALES TAX COLLECTION INFO
Fort Smith 2% sales tax collection (1% for streets; 0.75% for 2012 water/sewer bonds; 0.25% for fire and parks)
2015: $40.76 million (With 83.33% of the year reporting, the 2016 YTD is at 87.04% of the 2015 total.)
2014: $40.198 million
2013: $38.938 million
2012: $39.21 million
2011: $38.683 million
2010: $37.229 million
2009: $37.554 million
2008: $41.226 million
2007: $37.858 million
2006: $36.84 million

Fort Smith portion of 1% countywide sales tax
2015: $16.09 million (With 83.33% of the year reporting, the 2016 YTD is at 86.31% of the 2015 total.)
2014: $15.625 million
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