Fort Smith sales tax revenue up almost 9% in February report

Sales tax revenue for the city of Fort Smith continues to come in above budget, but the 2022 trend is somewhat off the pace of late 2021. The February sales tax report shows the city’s share of the 1% tax for city streets was up 8.9% from the same time last year.

The city’s share of the Sebastian County sales tax totaled $1.727 million, up 8.9% compared to the $1.586 million reported in February 2021, according to the February sales tax report. Because the budget estimate was what the city saw in February 2021, that share was also up 8.9% from the budget estimate.

The city’s share of the county-wide sales tax was up 17.44% in January from January 2021 and up 15.6% in December from December 2020. The February report reflects January’s transactions.

The city’s share of the countywide tax is closely watched 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 tax generated $3.915 million in the first two months of the year, a 13.5% increase from the $3.449 million generated in January and February 2021.

Fort Smith’s 1% street tax – used for maintenance and new construction on streets, bridges and drainage – generated $2.075 million in February, up 5.52% from the $1.967 million in February of last year. Again, the budget estimate was what the city made in January last year, so the revenue is 5.52% above the budget estimate.

“The City’s and County’s sales tax collections for February are over the 2021 collections and 2022 budget by 5.52% and 8.90%, respectively. The rate of increase is the same because we used 2021 collections for our 2022 budget for the January 2022 through August 2022 period. We did this because we wanted to capture the increase in sales tax revenues, year-over-year, but we did not want to overestimate the revenues in case sales tax revenues begin to decrease,” said City Administrator Carl Geffken. “The 2022 budgeted revenues are lower in the September 2022 to December 2022 period than what was collected in the same period in 2021 for that reason.”

January’s collection was 16.71% higher than January 2021, and December’s collection was up 15.6% from December 2020. The 1% street tax has generated $4.781 million so far this year, 11.55% more than the $4.286 million in the first two months of 2021.

Geffken said that despite current events February was another excellent month for sales tax collections.

“The increase in the price of gasoline and general inflation have provided part of the increase in sales tax revenues, but the majority of the increase is due to our strong economy,” Geffken said.

City Director Lavon Morton said the tax revenue for February shows a moderation in the strong growth trend that began in early 2020 and continued through  all of 2021.

“I believe the economy in Fort Smith continues to be strong, and I am optimistic that we will continue to have year over year growth in sales tax collections, although the moderation in growth may continue,” Morton said.

Director Neal Martin said he likes seeing this kind of growth in sales tax revenue.

“This growth, along with conservative budgeting, allows us to be able to have a rainy day fund to provide a local match for a grant to entice a potential new airline service out of Fort Smith. We have done really well budgeting and revenue growth, instead of tax increases, allows us to be financially healthy,” Martin said.

The Fort Smith Board of Directors approved a resolution March 15 that pledges $100,000 for the purpose of getting a second airline service into the Fort Smith Regional Airport. Airport officials are applying to the U.S. Department of Transportation for a Small Community Air Service Development Program grant, according to a memo from Deputy City Administrator Jeff Dingman.

The grant will allow airport administration to subsidize airline service for a period of time in order to add another air service destination other than Dallas. There are now five flights a day scheduled from Fort Smith to Dallas via American Airlines.

In 2021, Fort Smith’s share of the 1% Sebastian County sales tax was $21.055 million, 15.4% more than 2020 and up 18.14% over the city’s budget estimate. The 2021 total was $3.23 million more than city officials budgeted to spend within the general fund budget. The tax has posted year-over-year gains over the past several years, but 2021’s jump was the largest seen during recent years.

The 1% street tax generated $26.134 million in 2021, up 15.4% over 2020 and 17.42% over the budget estimate. The 2021 total was $3.877 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
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