Fort Smith sales tax revenue posts small gain through March

Fort Smith sales tax rebounded some in March, allowing city officials to breathe a little. The March sales tax report shows the city’s share of the 1% Sebastian County sales tax was up 3.04% from March 2023 and the 1% tax for city streets was up almost 1%.

This was welcome news to city officials following February reports that showed the sales tax collections for the city’s share of the 1% Sebastian County sales tax down by more than 3% and the collections for the 1% street tax down almost 5% from the same time last year.

“I am relieved to see that the sales tax receipts for the City and County sources returned to an increase over last year and the budget. While the City tax increase was less than 1%, the fact that it was positive and a reversal from last month means that there is no need to consider any changes to the budget at this point. I remain optimistic that the growth trend will continue and will become more robust as we proceed through 2024,” said City Director Lavon Morton.

The city’s share of the Sebastian County 1% sales tax totaled $1.937 million, up 3.04% compared to the $1.88 million reported in March 2023, according to the city’s March sales tax report released Wednesday (April 24). In the first quarter of the year, the tax generated $6.091 million in revenue, up 0.77% from the $6.045 million generated through March 2023.

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 March report measures February’s transactions.

“As I’ve mentioned with prior sales tax reports, sales tax collections will be flat, especially when compared to budget,” said City Administrator Carl Geffken. “We are experiencing the impact of higher interest rates and inflation. Thankfully inflation is coming down for consumers but construction costs are still high and increasing.”

Fort Smith’s 1% street tax – used for maintenance and new construction on streets, bridges and drainage – generated $2.311 million in March, up 0.74% from the $2.294 million reported in March 2023 and from what was estimated for the month in the city’s budget for the year. Revenue from the tax for January through March was $7.293 million, down 0.89% from the $7.358 million collected in the first quarter of 2023.

“It is encouraging to see that our sales tax revenue has exceeded expectations, surpassing both our budget projections and the numbers from the previous record-breaking year,” said City Director Neal Martin said. “It’s a great sign of economic health and stability, and we’re pleased to see these results.”

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