Fort Smith’s total sales tax revenue for the first three quarters of the year is up 15.6% compared to the first three quarters of 2020. Fort Smith’s share of the Sebastian County sales tax was $1.81 million in September, 18.3% higher than the $1.53 million in September 2020.
From January through September, Fort Smith has collected $54.582 million in sales tax revenue, including the city’s portion of the Sebastian County Sales tax, the 1% street tax, the ¾% bonds sales tax and the ¼% tax for fire and parks. Through September 2020, the city collected $47.211 million from those taxes, according to the city’s September sales tax report.
Numbers in September’s report reflect August’s transactions. In the 2021 budget, the city budgeted $1.46 million for the month, bringing the September revenues from the tax up 24.11% over from the budgeted revenues. In the first eight months of the year, budgeted revenues of the tax were the same as those collected in 2020.
For the remaining months, the city budgeted after looking at years past since the city’s budget is calculated prior to the sales tax reports for the later months of the year. The budget hearings for the 2022 budget is scheduled for Nov. 4. City Administrator Carl Geffken said the administration is proposing keeping 2022 sales tax revenue the same as its projected 2021.
“That takes into account the increase in 2021 but we are not increasing it further. We felt it prudent to budget the 2022 revenue at the same level as 2021,” Geffken said. “If sales tax collections dip, we can adjust the budget accordingly and if needed and if sales tax collections increase, we have funds to balance off revenues that may not meet their target.”
Geffken said his concerns over the budget are the same as they were in May 2020, that the higher sales tax revenues are temporary due to stimulus payments and supplemental unemployment.
“To counter that point is the growth Fort Smith is experiencing which can be seen in economic development projects, the number of ‘Now Hiring’ job signs, and the increase in house prices and soon, housing starts. I hope it’s the latter and not the former, but we need to plan prudently and I think we have accomplished that,” he said.
In the first nine months of the year, the city has collected $15.61 million from its portion of the county sales tax, a 15.37% increase from the $13.53 million collected through September 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.
Fort Smith’s 1% street tax – used for maintenance and new construction on streets, bridges and drainage – generated $2.18 million in September, a 14.74% increase from the $1.9 million in September 2020. The city’s budget estimated the city would collect $1.83 million this month, which makes the city’s actual earnings from the tax 18.85% above budget. So far for the year, the city has collected $19.486 million from the tax, up 15.72% from the $16.839 million collected in the first three quarters of 2020.
In 2020, September’s sales tax revenues dropped from high collections in the summer months. This year, though September’s revenues were down from those in August and July, they were higher than June’s. City Director Lavon Morton, said that difference is reflected in the unusually high difference in actual earnings versus budgeted earnings for the month. Yet even with that, Morton said the collections show that the economy in Fort Smith is very strong.
“This is clear evidence that the Fort Smith area economy is strong, and I believe sales tax collections should continue to be strong for the foreseeable future. All in all, there are a lot of positives in the Fort Smith area,” Morton 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.
PREVIOUS ANNUAL COLLECTION INFO
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