Sales tax revenue up in Fort Smith during the first half of 2020

Fort Smith sales tax revenue for the first half of 2020 is higher than expected, coming in slightly above revenue for the first six months of 2019. Two city directors are pleased with the results but remain cautious.

Fort Smith’s share of the 1% Sebastian County tax during the first six months of the year is $8.767 million, 3.01% more than the $8.51 million during the first half of 2019. The year-to-date revenue is 2.85% above the city’s budget estimate. The city’s share of the countywide tax in the June report was $1.54 million, up 10.09% from June 2019 and 9.94% from what the city budgeted for the month. Revenue from the tax supports the city’s general fund, which includes fire, police and other critical services.

The 1% street tax for Fort Smith’s street, bridge and drainage projects totaled $10.91 million for the first six reporting months of the year, up 1.18% compared with the same period in 2019. Revenue for the tax in the June report was $1.91 million, up 9.13% from the June 2019 report and 8.36% from what the city budgeted for June.

The June report reflects the revenue from May, when the state started phase 1 of reopening from closures caused by the COVID-19 pandemic.

City Director Lavon Morton said the city should continue to be cautious in the short term because there is still uncertainty regarding the overall economy until the COVID virus can be brought under control.

“The sales tax collections continued to hold up surprisingly well, actually indicating increased spending in the area,” Morton said. “This may be due in part to federal government stimulus payments, which increased disposable income and collection of sales tax on internet purchases in 2020 but not in the prior year…”

Fort Smith’s sales tax took the biggest hit in March, according to sales tax reports. Pandemic-related closings began in mid-March and continued through April, with openings beginning in May. The April report, which reflects revenues from March, showed a 1.55% decrease in the city’s share of the 1% Sebastian County sales tax from April 2019 and a 3.4% decrease in the 1% city street tax from April 2019.

April numbers, while down, also were better than experts predicted. The city’s share of the countywide tax in the May report was $1.38 million, down 1.67% from May 2019. Revenue for the 1% street tax in the May report was $1.693 million, down 4.3% from the May 2019 report.

Fort Smith City Director and Vice Mayor Kevin Settle said he continues to be “cautiously optimistic” about how the city will fare for the remainder of the year.

“We continue to see positive signs of our economy with the good outcomes of our sales tax dollars as we compare to last year,” Settle said. “We need to see if we have any major impact to our sales tax collections as we continue to move through the COVID-19 pandemic.”

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