Fort Smith sales tax revenue rises in March, up 3.8% year-to-date

Sales tax revenue for Fort Smith did not show a decline in March, though city officials are preparing for a major drop in the coming months. The March sales tax report shows the city’s share of the 1% Sebastian County sales tax up by 0.41% and the 1% tax for the city up almost 1%.

The city’s share of the Sebastian County sales tax totaled $1.377 million in the March report, up 6.21% compared to March 2019, and 6.09% above the budget estimate. The money from the city’s share of the countywide tax goes to the city’s general fund budget to among other things, pay for police, fire and other essential city services.

Fort Smith’s 1% street tax – used for maintenance and new construction on streets, bridges and drainage – generated $1.725 million in the March report, up 2.3% from $1.687 million in March 2019 and 1.26% above the budget estimate.

Revenue from the city’s portion of the countywide tax for the first three reporting months of the year was $4.423 million, up 3.8% compared with the same period in 2019. Revenue from the 1% tax in the first three reporting months was $5.531 million, up 2%.

City Administrator Carl Geffken said with the economic environment caused by the COVID-19 pandemic, the city was assuming tax revenues will dip by 80% in April, but noted that dip could range between 20% and 80%.

“The projected job losses are over 10% of our job market in the Fort Smith MSA, but the distribution of the $1,200 stimulus payment, the supplemental unemployment insurance and the implementation of the Payroll Protection Program could mitigate the size of the dip,” Geffken said. “Unfortunately, we need to plan for the worst and hope for the best because if April doesn’t drop by the 80% we’ve initially estimate, it’s the impact of COVID-19 on the long-term health of the economy and whether or not COVID-19 becomes a seasonal virus until a vaccine is developed.”

Geffken said city staff is working with area universities to assist with projections so to have a starting point for future planning.

Geffken told city directors at April 7 board meeting that collections in May also are expected to drop by 80%, while collections in June and July are expected to be 50% of what the city would normally collect. In total, he estimated a 22% reduction in city sales tax revenue because of the COVID-19 pandemic.

He told directors the city is taking precautions now and said he asked each department to cut 10% of their budgets. He said each department has “ponied up” what they can, and said there will be no cuts in personnel and there will be no furloughs. The budget cuts will make sure the city can get through the remainder of the year even with diminished sales tax revenues.

In 2019, Fort Smith’s share of the 1% Sebastian County sales tax was $17.265 million, up 2.1% over 2018, and up 5.66% over the city’s budget estimate. The 2019 total was $397,183 more than city officials budgeted to spend within the general fund budget. The 1% street tax generated $21.73 million in 2019, up 1.4% over 2018, and up 6.5% over the budget estimate. The 2019 total was $579,260 more than city officials budgeted to spend on the street tax program.

PREVIOUS ANNUAL COLLECTION INFO
Fort Smith 1% sales tax collection for streets
2019: $21.73 million
2018: $21.503 million
2017: $21.204 million
2016: $21.156 million
2015: $20.308 million

Fort Smith portion of 1% countywide sales tax
2019: $17.265 million
2018: $17.043 million
2017: $16.691 million
2016: $16.58 million
2015: $16.09 million