Fort Smith sales tax revenue continues to be strong in the midst of the COVID-19 pandemic. Fort Smith’s portion of the Sebastian County 1% tax has generated $15.1 million during the first 10 months of 2020, up 5.3% from 2019 and up 5.2% from the budget estimate.
Year-to-date revenue from the 1% city street tax totaled $18.77 million through October, up 3.7% compared to the same period in 2020 and up 4.05% over the budget estimate – $866,144 – for the first 10 months of the year, according to the city’s October sales tax report.
The October report, which measures August transactions, shows the city collected $1.564 million from its portion of the countywide sales tax, up 9.41% from the budget estimate and 9.57% compared with revenue from the same time frame in 2019. Revenue from the tax supports the city’s general fund, which includes fire, police and other critical services.
The September report shows the 1% street tax revenue at $1.93 million, up 9.37% from the budget estimate and up 7.73% compared with the same period in 2019.
When the pandemic first hit in March, predictions for sales tax revenue was that it would take a dive, not continue to surpass last year’s revenues. In April, City Administrator Carl Geffken told city directors that sales tax revenues for April and May were expected to be 20% of what the city would normally collect due to the COVID-19 pandemic and ensuing state-regulated closures of restaurants, bars and other business. Collections in June and July were expected to be 50% of what the city would normally collect, he said. In total, Geffken estimated a 22% reduction in city sales tax revenue because of the COVID-19 pandemic. To prepare for the reductions, city departments were asked to trim 10% from each of their budgets.
“I am very happy to the sales tax report exceeds our expectations,” said Fort Smith Director and Vice Mayor Kevin Settle. “It shows that the citizens of Fort Smith really shopped local and helped our local economy.”
Settle said sales tax revenue coming in higher than last year’s revenue shows that Fort Smith has a very good, stable economy.
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 February, 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, which showed tax revenues from March, 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. The June, July and August reports, which showed sales tax revenue from April, May and June, reported revenues from the city’s portion of the countywide sales tax and the 1% street tax for both months was higher than the same time frames in 2019.
Director Neal Martin said the city’s sales tax collections continued to be good news.
“Again, we have to monitor what happens with COVID as cases increase, but this has been a strong fiscal year for the city. Each month, I think there could be a drop in revenue, but each month continues to be strong,” Martin said.
He said things could change in 2021 with a potential new presidential administration and a more authoritarian approach with lockdowns.
“As I’ve been saying all year, the Fort Smith economy is strong and is showing resilience. We don’t need a heavy handed approach that could slow it down,” Martin said.
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