Fort Smith sales tax revenue up in January report

by Tina Alvey Dale ([email protected]) 322 views 

Fort Smith sales tax revenue began 2024 on better footing after seeing a drop to end 2023. The January sales tax report shows the city’s share of the 1% Sebastian County sales tax rose 2.15% from January 2023 and the 1% tax for city streets was up almost 1% from a year ago.

Though sales tax revenue was not up much over budget as it has been in January the last few years, the numbers do show an upward trend that is leaving city officials optimistic about the city’s financial state.

The city’s share of the Sebastian County sales tax totaled $2.341 million, up 2.15% compared to the $2.291 million reported in January 2023, according to the January sales tax report. The city estimated the revenue generated by the tax in January would be the same as it was last year, so income from the tax was up 2.15% over the budget estimate.

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 January report measures December’s transactions.

“The numbers are up slightly from the record-setting year we had in 2023, so I do feel good about where it’s at,” said Director Neal Martin. “We saw a leveling off of the 2023 pace towards the end of last year, so I’m hopeful this is a good sign.”

Fort Smith’s 1% street tax – used for maintenance and new construction on streets, bridges and drainage – generated $2.838 million in revenue for January, the report shows. That is up .87% from the $2.813 million reported in January 2023 and from what is estimated for the month in the city’s budget for the year.

“January sales tax collections returned to the recent year trend of an increase over prior year and budget, although the increase was less than 1%. The city’s share of the Sebastian County tax, which goes to the general fund, was up by more than 2%. Overall, the city is in a good position financially, which has allowed funding for all planned programs at the current time,” said Director Lavon Morton. “The funding for construction on the water system is the one area that needs to be addressed in the very near term. I am hopeful that information from Burns McDonnell consultants, which should be available in March, will provide the information the board needs to begin to address the need for funds for the water system.”

Representatives from Hawkins Weir Engineers Inc. addressed the Board of Directors Feb. 13, stating that the city is reaching its maximum daily water flow capabilities and the only fix, a 48-inch water transmission line and upgrades to the Lake Fort Smith Water Treatment Plant, will cost the city approximately $221 million. According to the study, the need for the 48-inch water transmission line and capacity upgrades to the plant are needed to ensure proper water pressure and fire flow to the area, Utility Director Lance McAvoy said in a memo regarding the study.

“I think Fort Smith is in a good place financially; however, we will be having a discussion on new needs that are on top of the budget that we approved for 2024,” Martin said on Monday after looking at the January sales tax report. “I do have some concerns with the 2024 budget based on those new needs.”

Fort Smith sales tax revenue dropped in December even below budget estimates, but the city still managed to end 2023 with tax revenues above those in 2022.

In 2023, the city received $24.648 million in revenue from the city’s share of the countywide tax. The 2023 revenue was $806,742 more than city officials budgeted to spend within the fund budget and $3.095 million more than the tax generated in 2022. The tax has posted year-over-year gains for the past five years with 2022’s revenue coming in 9.6% more than 2021. Fort Smith’s 1% street tax generated $29.924 million in 2023, up 4.23% over the budget estimate.

PREVIOUS ANNUAL COLLECTION INFO
Fort Smith 1% sales tax collection for streets
2023: $29.924 million
2022: $28.65 million
2021: $26.667 million
2020: $22.66 million
2019: $21.73 million
2018: $21.503 million
2017: $21.204 million

Fort Smith portion of 1% countywide sales tax
2023: $24.648 million
2022: $23.553 million
2021: $21.49 million
2020: $18.246 million
2019: $17.265 million
2018: $17.043 million
2017: $16.691 million