Fort Smith tax revenue down marginally in November report

Fort Smith sales tax revenue in November rebounded somewhat, helping the city come closer to hitting budgeted revenues for the year. The November revenue was 3.82% above the city’s budget estimate.

The city’s share of the 1% Sebastian County tax in the November report was $2.013 million, down 0.12% compared with the $2.016 million collected in the same month in 2023.

In the first 11 reporting months of the year, the city’s portion of the countywide 1% tax is $22.446 million, down 0.8% compared with the same period in 2023, and 0.28% below 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 supporting budgets for police, fire and other essential city services.

“With the November report, the overall sales tax revenues are tracking very close to the budgeted revenue forecast. Ultimately, we want to be accurate in our revenue forecasting so that our budget doesn’t suffer over the course of the year, and the fact that these revenues are tracking so close to budget is a good indicator for us,” said Acting City Administrator Jeff Dingman.

Fort Smith’s 1% street tax – used for maintenance and new construction on streets, bridges and drainage – totaled $2.439 million in the November report,up 0.95% compared with the $2.416 million in the November 2023 report. The November revenue was 2.13% higher than the budget estimate.

Revenue from the 1% street tax in the first 11 reporting months of 2024 is $27.019 million, down 1.7% below the same reporting period in 2023, and 1.09% below the budget estimate.

“This is good news for the city.  It keeps us on pace (just slightly under) last year’s record year in revenue collections,” said Fort Smith City Director Neal Martin.

With growth expected in consumer spending next year, Martin said he is “cautiously optimistic.”

“We will keep our eyes on these reports at the beginning of the year as we monitor the national and local economy,” he said.

City administration projected a modest increase – about 2% over FY24 projected actuals – in anticipated revenue from sales taxes for 2025, largely due to anticipated development projects already in the pipeline and the growth associated with them, Dingman said. The city continues to maintain adequate fund balances in all four operating funds, and capital projects are progressing as funding for them allows, he said.

“(However), infrastructure projects for water and wastewater will continue to put pressure on the city’s utility finances until we can get a long-term financing solution in place,” Dingman said.

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 revenue up 9.6% over 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