The Fort Smith Board of Directors is set to begin a mid-year review of the $42.5 million general fund budget and the $125.147 million in operating budget expenditures in the coming weeks.
A budget review study session was set for June 26, but the session was postponed because Directors Andre’ Good and Neal Martin and possibly others could not attend the meeting. A new date for the meeting has not been set.
The board approved 2020 general fund budget expenditures – which supports police, fire, administration and other city services – of $42.5 million with projected revenue of $43.19 million. The general fund budget estimated ending the year with a $682,728 reserve fund. The city’s 2020 capital budget – primarily focused on the water and sewer system – allows for $125.147 million in expenditures and $131.581 million in revenue. The budget estimated a year-end reserve fund of $6.433 million.
The mid-year review is time to look at the city’s financial position for the year, set budget goals, review financial policies and look at any wanted or needed changes, said Fort Smith City Administrator Carl Geffken. In the past, the review has been a time to set preference on police spending, salary schedules and other city-wide or department changes, he said.
“The board looks at and makes decisions about positions, goals and focus,” he said.
Director Lavon Morton said the review is important in understanding where revenue and expenses are through June 30.
“There was an impact on sales tax revenue from the COVID-19 temporary business closures and the phased reopening, and we need to understand recent months’ trends and any information we have from state wide or regional forecasts of revenue for the last half of the year and 2021,” Morton said.
As of April 30, the city had a total sales tax revenue (combined city 1% sales tax and the city’s portion of the Sebastian County sales tax) of $20.461 million, 0.7% higher than the $20.317 million budgeted for the first four months of the year. Utilities revenue at $15.718 million through April 30 is down 14.9% from budget revenues; state turnback revenue of $2.393 million is down 4.7%; and franchise tax revenue of $1.688 million is down 4.3% from budgeted.
“It’s going to be a difficult year,” Geffken said. “I’m not sure where we will end up, but that is why we put money aside for a rainy day. That will get us through this rainy day, and we’ll plan for the future to put money back into our fund balance.”
The city has made a 10% cut in budgets in all departments and will take those recommendations to the board, he said. Those 10% expenditure reductions to the 2020 budget are something the board needs to understand, Morton said, noting they also need to understand the impact of the 10% expenditure reduction on department operations and plans for 2020, including any impact on major programs.
“(The board needs to) obtain a good understanding of where the city stood with respect to finances at the end of 2019. We now have the 2018 audit and the 2019 LOPFI report and an understanding of the unaudited financial position at the end of 2019 will be a major factor in developing the 2021 budget goals,” Morton said.