Fort Smith tax revenue up 37% in recent report, countywide tax share up 16% year to date

by Tina Alvey Dale ([email protected]) 433 views 

Fort Smith’s sales tax revenue rebounded in April, coming in around 37% higher than the same period in 2020. Sales tax revenues have in recent months consistently come in higher than estimated as well as higher than the corresponding month 12 months ago.

March’s collections, which looked at sales in February, were the lowest in the past 12 months, coming in around 1% higher than the same period in 2020, but April made up any ground that might have been lost. The city’s share of the Sebastian County sales tax totaled $1.947 million in April, according to the city’s April sales tax report, up 36.96% compared to April 2020. Numbers in April’s report reflect March transactions.

April 2020 numbers reflected sales in the first few weeks of the COVID-19 pandemic and one of the lowest months for sales tax in 2020. In the 2021 budget, the city budgeted $1.421 million for the month of April, so the revenue is up 36.96% from the budget.

“I consider the very strong April numbers, which are reflective of March sales taxes collected in April, to result from multiple factors, principally the beginning of the reopening of the economy along with the $1,400 stimulus checks, some of which went out in March,” said Fort Smith City Director Lavon Morton.

So far this year, the city has collected $6.791 million, a 16.18% increase from the $5.845 million collected in the first four months of 2020. The city’s share of the countywide tax is important because the revenue provides money for the city’s general fund budget, with much of that budget paying for police, fire and other essential city services.

“The April Sales Tax Report is strong evidence of the growth and progress happening here in Fort Smith. Collecting 37% higher than we budgeted for is very exciting,” said City Director and Vice Mayor Jarred Rego. “These numbers tell me that our economy is strong and consumers are feeling confident enough to spend and invest their money locally. A month like this is such good news because any increase in revenues has a very positive impact on the services we are able to provide to the people of Fort Smith.”

Fort Smith’s 1% street tax – used for maintenance and new construction on streets, bridges and drainage – generated $2.439 million in April, a 37.27% increase from the $1.776 million in April 2020. Again, the budget estimate was what the city made in April last year, so the revenue 37.27% above the budget estimate. So far for the year, the city has collected $8.462 million from the tax, up 15.8% from the $7.308 million collected in the first four months of 2020.

“Revenue has been up, but 2021 (numbers) have been very good. We are up nearly 15% for the year and, had we not had the bad weather In February, we would be up even more. I think this continues the trend of strong growth and shows the strength of the Fort Smith economy,” said City Director Neal Martin.

He said the city’s leadership is pleased with the sales tax report, noting that the city has had “a good run the last 12 months.” Although he thinks the city will continue to see strong numbers for the remainder of the year, he doubts 37% above the projections will continue.

“I think we are going to see a trend for another month or so,” Martin said. “I think we will finish the year ahead of last year, but we won’t be beating those numbers by that big (37%) of a margin.”

Morton agreed that the likelihood is good that strong sales tax collections will continue for the near term.

“I also believe that sales tax collections will be positive, with increases in the high single digits, for the longer term as the economy continues to improve and we see the continuing impact of collection of sales tax on internet purchases,” he said.

In 2020, Fort Smith’s share of the 1% Sebastian County sales tax was $18.246 million, up 5.7% over 2019, and up 5.52% over the city’s budget estimate. The 2020 total was $953,824 more than city officials budgeted to spend within the general fund budget. The tax has posted year-over-year gains for the past five years, but 2020’s jump was the largest seen during that time period.

The 1% street tax generated $22.66 million in 2020, up 4.02% over 2019, and up 6.08% over the budget estimate. The 2020 total was $1.298 million more than city officials budgeted to spend on the street tax program.

Fort Smith 1% sales tax collection for streets
2020: $22.66 million
2019: $21.73 million
2018: $21.503 million
2017: $21.204 million
2016: $21.156 million

Fort Smith portion of 1% countywide sales tax
2020: $18.246 million
2019: $17.265 million
2018: $17.043 million
2017: $16.691 million
2016: $16.58 million