Fort Smith sales tax up more than 15% in 2021 reporting year

Fort Smith had a good year in 2021 in sales tax revenues with totals coming in more than 15% higher than those in 2020. According to the December sales tax report, Fort Smith’s share of the Sebastian County sales tax was $21.055 million in 2021, 15.4% higher than 2020 and up 18.14% from budget estimates for the year.

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 2021 total was $3.23 million more than city officials budgeted to spend within the general fund budget and $2.81 million more than the tax brought the city in 2020. The tax has posted year-over-year gains for the past five years, but 2021’s jump was the largest seen during that time period by far.

City Administrator Carl Geffken said the growth in sales tax collections year-over-year indicates that Fort Smith has a healthy economy, is growing and will continue to grow along with the country’s growth.

“The City’s fiscal health is very good and the additional funds will go toward additional roads and drainage, the upkeep of our parks, the purchase of new fire equipment, and the faster payoff our water and sewer debt. This sales tax growth also helps our credit ratings, provides funds for future capital projects, and affords a ‘rainy day’ fund for emergencies,” Geffken said.

The December sales tax report, which measures November’s transactions, shows the city collected $1.85 million that month from its portion of the countryside sales tax, up 22.42% from the budget estimate and 15.6% higher than the $1.6 million collected in December 2020.

“It sets the bar high for next year, but we have to find more ways to grow the city. We have a bright future, and we have to be sure that the City is fostering that growth and not getting in the way of people spending their hard earned money. The more money they have in their pocket, the better,” said Director Neal Martin.

Fort Smith’s 1% street tax – used for maintenance and new construction on streets, bridges and drainage – generated $26.134 million in 2021, up 15.4% over 2020, and up 17.42% over the budget estimate. The 2020 total was $3.877 million more than city officials budgeted to spend through the street tax program. The December report showed the 1% street tax revenue at $2.268 million for the month of December, up 14.78% from the previous year and up 18.56% from the budget estimate.

Director Lavon Morton said that while December sales tax collections continued the strong trend since July and August, inflation could affect consumer spending in 2022.

“I believe we have to be mindful that the trend of increased sales tax collections will likely at some point moderate compared to 2021. Our current budget is conservative and that is appropriate,” Morton said.

The ¼ cent sales tax for fire and parks generated $6.53 million in 2021, 15.17% higher than the $5.67 million in 2020 and 17.42% above the budget estimate. The tax was $969,336 more than the budget estimate. The ¾ percent city sales tax, used to pay off bonds for sewer and water projects, generated $19.6 million in 2021, 15.21% more than the $16.998 generated by the tax in 2020 and 17.42% above the budget estimate. The tax generated $2.91 million more than the budget estimate.

PREVIOUS ANNUAL COLLECTION INFO
Fort Smith 1% sales tax collection for streets
2021: $26.134 million
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
2021: $21.055 million
2020: $18.246 million
2019: $17.265 million
2018: $17.043 million
2017: $16.691 million
2016: $16.58 million