Estimates vary on cost per citizen of proposed Marshals Museum tax

by Michael Tilley (mtilley@talkbusiness.net) 1,277 views 

With Fort Smith residents soon to vote on a one-cent sales tax increase for nine-months to support completion of the U.S. Marshals Museum, a frequent question is, “How much, on average, would the nine-month increase cost each city resident?”

“The short answer is, ‘No,’” said Fort Smith Finance Director Jennifer Walker when asked if she had a definitive answer to the question. “The reason is that spending patterns vary widely among demographics and personal situations.”

The Fort Smith Board of Directors in December approved an ordinance for a March 12 election on the tax. Early voting begins March 5. The ordinance governing the special election for the sales tax requires that the tax is imposed for only nine months. The museum foundation will pay the city’s cost of the special election. If passed, the sales tax will raise around $16 million of the remaining $17 million needed to complete the museum. The museum has raised enough money to pay for the construction of the facility, which began in July 2018. The remaining funds are needed to build the exhibits and “experience” of the museum.

Walker said city residents – of which there were 88,037 in the latest U.S. Census update – will not pay all of the about $16 million the nine-month tax increase will collect if approved by voters. Non residents and businesses not based in the city are examples of others who pay the tax, Walker noted. However, Walker did offer a cost range for what the tax might cost city residents.

“A single resident with very low income buying only the bare necessities and receiving assistance could pay less than $10 per year on a 1% sales tax, while a family of four with a very high income spending money on all the extras may pay upwards of $400 a year,” she wrote in an e-mail explainer to Talk Business & Politics.

Rusty Myers, former economic development director with the Western Arkansas Planning and Development District, developed a formula when part of his job was to do economic modeling for local governments. Based on several variables, including retail sales data provided by the U.S. Census Bureau, Myers estimates only half of the tax revenue is paid by city residents. Even with more people shopping online, Myers said the “50% estimate would still be valid today.”

Based on his formula, city residents would pay $8 million of the $16 million the tax would generate, or about $91 per person. The estimate also shows the average household – there were 35,278 households in the latest Census estimate – would pay $227 extra if the tax is approved.

The median household income in Fort Smith is $36,532.

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