Fort Smith sales tax revenue gains continue through April

Fort Smith sales tax revenues in April continued the trend, with the city’s share of the Sebastian County tax coming in up almost 8% more than April 2022. April numbers reflect February transactions.

The April sales tax report shows the city’s share of the 1% Sebastian County sales tax totaled $2.136 million, up 7.8% compared to the $1.982 million reported in April 2022. The city estimated the revenue generated by the tax for the month would be $2.014 million, which means the actual collection came in 6.08% higher than budgeted.

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 first four months of 2023 show revenue from the tax at $8.181 million, 8.1% higher than the 7.568 million the tax reported through April 2022.

Voters will go to the polls Aug. 8 to extend the 1-cent countywide sales tax in Sebastian County for another 10 years. The tax, which generated $33.768 million in 2022, is set to sunset June 30, 2024, without the extension. The tax is split among the city and towns in the county and the county itself based on population and makes up a big part of the budgets of many of the municipalities in the county.

“It was good again to see sales tax revenue higher than expectations. I think Fort Smith is a place that people are wanting to invest in and wanting to spend money, but inflation also plays a role in those higher numbers,” said Fort Smith City Director Neal Martin.

Fort Smith’s 1% street tax – used for maintenance and new construction on streets, bridges and drainage – reported $2.61 million in April, up 6.67% from the $2.44 million reported in April 2022, according to the report. Through April, the tax has generated $9.964 million, 7.8% more than the $9.244 million reported in the first four months of 2022.

“The impact of home building in Fort Smith is also providing an economic boost. Our developers are building apartments, townhomes, and houses to prepare for the Foreign Military Sales project, and their developments are providing economic growth. Lastly, there is a great deal of building occurring in Fort Smith, especially the Mercy Hospital expansion and the projects at the Fort Smith Airport. All of this is having a lasting impact on our economy,” said City Administrator Carl Geffken.

INFLATION, CONSENT DECREE MONEY
Inflation also is having an impact on the tax revenues. The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.8% in April on a seasonally adjusted basis after rising 0.6% in March, the U.S. Bureau of Labor Statistics reported May 12. The all items index increased 4.2% before seasonal adjustment over the past 12 months.

“It is important that sales tax collections meet or exceed the rate of inflation for 2023 and so far, that is what is happening. This will allow budgeted funding for all City programs as well as provide funds for the Consent Decree work,” said Fort Smith City Director Lavon Morton. “Every month of 2023 has been an increase over 2022, continuing a strong trend for sales tax collections that goes back to 2020.”

The 0.75% sales tax, approved by the voters in May 2020, collected $1.629 million for consent decree work and $325,852 for police. From February through April, the tax has collected $5.363 million, $4.469 million of which goes specifically to consent decree projects.

“We have collected almost $4.5 million for the Consent Decree work in three months. This Consent Decree-dedicated sales tax is important for continuing work as well as demonstrating to the EPA and the Justice Department that Fort Smith is committed to repairing our sewer and stormwater systems,” Morton said.

In 2022, Fort Smith’s share of the 1% Sebastian County sales tax was $23.553 million, 9.6% higher than 2021 and up 9.05% from budget estimates for the year. The 2022 total was $1.955 million more than city officials budgeted to spend within the fund budget and $2.06 million, more than the tax brought the city in 2021. The 1% street tax generated $28.85 million, up 7.4% over 2021 and up 7.65% from budget estimates. The 2022 total was $2.05 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
2022: $28.85 million
2021: $26.667 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
2022: $23.553 million
2021: $21.49 million
2020: $18.246 million
2019: $17.265 million
2018: $17.043 million
2017: $16.691 million
2016: $16.58 million