Fort Smith’s sales tax revenue shows consumer spending rebounded, putting more in the city’s accounts than predicted. The city’s share of the Sebastian County sales totaled $1.871 million, up 11.13% compared to May 2021, according to the city’s May sales tax report.
Because city administration used 2021’s sales tax revenues in the first part of the year to budget 2022’s sales tax collection, May’s revenues are also 11.13% higher than what was budgeted. May’s report reflects sales tax collections from March.
Though sales tax revenue has consistently come in higher than budgeted for more than the past year, April’s gain was only 1.81% higher than April 2021. City Administrator Carl Geffken said last month that while April’s numbers were only slightly higher than budget, unlike prior months that were much higher, it is important to keep in mind February’s weather had several events that lasted for several days and affected spending that month. April’s report reflected sales tax collections from February.
“I think we are settling down to a more normal range of growth now. I think the sales tax growth we saw in May, due to spending in March, is due to pent up demand and spending from the storm in February and overall economic growth that is higher than expected,” Geffken said.
The countywide sales tax has generated $9.439 million in the first five reporting months of this year, 11.39% more than the $8.474 million generated through May of 2021. 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.
Fort Smith’s 1% street tax – used for maintenance and new construction on streets, bridges and drainage – generated $2.336 million in revenue in May, up 5.8% from the $2.206 million reported in May 2021. The budget estimate was what the city made in May of last year, so the revenue is up 5.8% from the budget estimate.
“(The sales tax) numbers reported show some bounce-back from flat in the April numbers. That is definitely a relief,” said City Director Lavon Morton. “Hopefully, the collections will continue to hold in at least the mid-single digits for percentage growth. Overall, I feel good about the Fort Smith economy at this time. Hopefully the country will not drift into a recession, although that remains a possibility.”
April’s collection of $2.444 million was up 0.22% from April 2021. March’s collection of the street tax was $2.019 million, 5.52% above budget estimate. February’s collection was $2.075 million, 5.52% above budget estimate, and January’s collection was $2.706 million, 16.71% higher than budget estimates.
Through May, the city has collected $11.578 million from the sales tax, 8.52% more than the 10.669 million collected from the tax in the first five months of 2021.
“Higher interest rates will begin to temper the growth, and the rate of inflation will inflate our tax collections while impacting future consumer spending. Thinking about everything I have mentioned, I believe the overall trend is positive for Fort Smith and that’s why our sales tax collections are above budget,” Geffken said.
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