Sales tax revenue fell more than 3% in Fort Smith’s August report, with year-to-date revenue up 1% and 2.6% above the budget estimate. Franchise revenue could end the year 5% below budget, cutting into some of the sales tax revenue gains, but Fort Smith Finance Director Jennifer Walker believes excesses in the city’s portion of county sales tax and its share of property taxes should help out.
In a recent memo to city administration and the Board of Directors, Walker said, “County Sales Tax excess will offset approximately $275,000 of the ($250,000-$300,000) shortfall. Property Tax will likely offset the rest of the shortfall, although Property Tax estimates won’t be available until after November.”
One-percent street tax revenue in the August report totaled $1.798 million, down 3.02% compared with the August 2016 report. Year-to-date revenue for the 1% is $14.383 million, up just under 1% compared with the same period in 2016. The August revenue reflects taxes on June transactions.
The total sales tax revenue to date is $359,946 (street, bond, park/fire) more than the budget estimate, noted Walker’s memo.
The city’s share of the county sales tax with the August report was $1.428 million, down 1.3% compared with the August 2016 report. The city’s share of county sales tax revenue to date is $11.317 million, 1.6% above last year and 0.9% above budget. Total revenue to date is $103,144 more than the budget estimate.
County sales tax revenue is critical because it funds a majority of city functions, including police and fire services.
“Sales tax trends appear to be holding steady at approximately 1-2% over budgeted amounts and previous year actuals with some variance month to month. Franchise Fees continue to trend below budget expectations. Franchise is approximately 15% below budget factoring timing variances,” Walker noted, adding it will likely fall 5% below budget by the end of the year.
The city of Fort Smith receives 3.25% of the area’s 9.75% sales tax. From that figure, 2% is a city sales tax divvied up between the streets, drainage, and bridges program (1%), collections for bond issues (0.75%), and fire and parks (0.25%, evenly split between the two). The state receives the remaining 6.5%.
Sales tax revenue is up in several counties in the Fort Smith metro, according to Arkansas Department of Finance and Administration reports. Crawford County sales tax revenue for the first six reporting months of 2017 totaled $6.189 million, up 5.5% compared to the same period in 2016. Franklin County sales tax revenue in the six months was $1.765 million, up 36.2% compared to the same period in 2016.
The Logan County sales tax rate rose from 1% to 2% in January. Tax revenue in the county during the six months totaled $2.182 million, well ahead of the $1.092 million in the same period of 2016. Sebastian County revenue in the six months totaled $15.423 million, up 1.3% compared with the same period of 2016.
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)
2016: $42.313 million
2015: $40.76 million
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
2016: $16.58 million
2015: $16.09 million
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