Fort Smith share of countywide sales tax up more than 17% in June report

Fort Smith’s sales tax revenue had another strong month in June, coming in significantly higher than anticipated. The city’s share of the Sebastian County sales tax totaled $2.033 million, up 17.39% compared to June 2021, according to the city’s June 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 the $1.732 million budgeted for the month. June’s report reflects sales tax collections from April.

City Administrator Carl Geffken said growth from economic development has had a positive impact on sales tax collections.

“All the work the City is doing for streets, sidewalks, drainage, and the consent decree are helping the City’s economy.  If cities had access to more detailed sales tax collection information, we would be able to examine the details and determine the specific areas that are driving the growth,” he said.

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. Those numbers came back even higher with May’s sales tax revenue coming in more than 11% higher than budgeted.

The countywide sales tax generated $11.471 million in revenue during the first half of the year, a 12.49% increase from the $10.206 million generated through the sales tax in the first six months 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 $2.505 million in the June report, up 15.13% from the $2.178 million reported in June 2021.

“I expected mid single digit monthly increases for the remainder of 2022. What we saw for June was more than 15% in all categories. Clearly the Fort Smith economy remains very strong,” said Director Lavon Morton.

Economists have also said inflation is playing a part in rising government tax revenue related to sales and use taxes.

May’s collection of $2.334 million was up 5.8%. 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 June, the city has collected $14.083 million from the street sales tax, 9.64% more than the $12.845 million collected from the tax in the first two quarters of 2021.

“We are at a point where we can begin to consider funding some of the ’new needs’ that we will soon consider,” Morton 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