Fort Smith’s share of county tax up more than 8% through May

by Tina Alvey Dale ([email protected]) 473 views 

Fort Smith sales tax revenues in May once again came in higher than this time last year and higher than expected, with the city’s share of the Sebastian County tax up almost 9% more than April 2022. April numbers reflect February transactions.

The May sales tax report shows the city’s share of the 1% Sebastian County sales tax totaled $2.039 million, up 8.9% compared to the $1.871 million reported in May 2022. The city estimated the revenue generated by the tax for the month would be $1.901 million, which means the actual collection came in 7.26% 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 five months of 2023 show revenue from the tax at $10.219 million, 8.26% higher than the $9.439 million the tax reported through May 2022.

Voters will go to the polls Aug. 8 to extend or end 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.

Fort Smith City Director Neal Martin said he is no longer surprised by the sales tax data provided each month because there have been too many months of positive growth year after year for it to be a fluke.

“While inflation does play a role, the consistent growth has shown the strength of the local economy. I’m not an economist, but I hear that a recession may not occur, which may bode well for continued growth,” Martin said. “With the construction activity for the Foreign Military Sales mission, we are going to continue to see growth. This is a great thing for our city.”

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1% in May on a seasonally adjusted basis after rising 0.8% in April, according to the the U.S. Bureau of Labor Statistics June report. The all items index increased 4% before seasonal adjustment over the past 12 months.

Fort Smith’s 1% street tax – used for maintenance and new construction on streets, bridges and drainage – reported $2.491 million in May, up 6.76% from the $2.333 million reported in May 2022. Through May, the tax has generated $12.456 million, 7.58% more than the $11.578 million reported in the first five months of 2022.

“Fort Smith’s sales tax collections are still performing better than expected. For the year to day through May, city tax collections are 8.68% over budget and the city’s portion of the countywide sales tax is 6.57% over budget. The current record low unemployment rate, despite the higher interest rates, and the upcoming FMS project and economic development projects continue to expand the Fort Smith and River Valley economy. This growth and the stable employment figures are reflected in these sales tax figures,” said City Administrator Carl Geffken.

Geffken said the taxes support the police, fire, engineering, and parks departments as well as all administrative departments in the city, which allows the city to replace of fire and police equipment, pave city-owned roads, provide police officer and firefighter salaries, fix drainage problems, and provides the funding to maintain our parks and for parks projects, such as the John Bell, Jr. park and work at Creekmore Park, including the new walking path and future bath house.

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.

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