Updated city of Fort Smith budget includes almost $17 million in proposed cuts

Almost $17 million in proposed cuts from the city of Fort Smith’s four main operating budgets are part of a draft 2026 budget, with some of the reduction coming from removal of 71 now-vacant jobs. The job cuts are estimated to reduce the budget by $4.226 million.

The Fort Smith Board of Directors is set to consider and possibly vote on the 2026 budget at a Dec. 16 regular meeting. Most of the board members pushed back against the initial 2026 budget that included a more than $8 million deficit with the city’s general fund budget.

In 2024, the general fund budget posted a $6.47 million deficit and is projected to end 2025 with a $15.56 million deficit. The city’s fund balance was $35.472 million at the end of 2024. It is projected to be $19.911 million at the end of 2025 and was initially projected to fall to $11.818 million at the end of 2026.

The first proposed 2026 budget projected an $8.092 million deficit, with $53.695 million in revenue and $61.788 million in expenditures. Of the expenditures, $20.589 million was for the Fort Smith Police Department and $16.227 million is tied to the Fort Smith Fire Department. The first proposed 2026 budget shows a $3.658 million decline in estimated revenue and an $11.126 million decline in expenditures.

POLICE, FIRE CUTS
During a Nov. 17 budget hearing, the board and city staff outlined several areas that could be changed to address the planned general fund budget deficit and to improve the outlooks for the other three large budget areas — the water and sewer fund, the solid waste fund, and the streets and maintenance fund.

Acting City Administrator Jeff Dingman on Dec. 4 sent the board a 17-page budget summary that includes $16.904 million in expense reductions across the four budget categories. (The budget summary memo was not made public, but was made available to Talk Business & Politics through a simple request.)

“The overall budget numbers reflect the elimination of 71 total vacant positions across all funds,” Dingman noted in the memo. “Some are vacant part-time or seasonal positions, so the net impact is the equivalent of reducing 61.15 Full-Time Equivalent (FTE) positions. The budget was also reduced by removing the appropriate amount of health insurance, social security, retirement, workers’ compensation, and other benefits associated with each vacant position. The eliminated positions include the eight police officer positions and the six firefighter positions as discussed on Nov. 17. When the final budget document is assembled after adoption, it will include the reduced headcount numbers for each program.”

Following are the new revenue and expense projections for the four primary operating funds.
General Fund
Revenue: $54.265 million
Expenditures: $54.265 million

Water and Sewer Fund
Revenue: $72.235 million
Expenditures: $69.334 million

Solid Waste Fund
Revenue: $26.177 million
Expenditures: $20.253 million

Streets and Maintenance Fund
Revenue: $10.966 million
Expenditures: $10.671 million

“After the capital expenses noted above, each fund’s reserve is still projected to have a healthy fund balance even after the capital purchases are applied,” Dingman wrote. “The General Fund reserve is projected to end FY2026 at 34.7%. The Streets Maintenance Fund is projected to end at 59.9%. The Water/Sewer Fund is projected to end at 37.5% (allowing for projected W/S Debt Service Coverage Ratio of 115%). The Solid Waste Fund, including revised estimated revenues from the recently approved rate adjustment, projects an ending reserve balance of 36.9%.”

OTHER PERSONNEL CUTS
The largest cut in the overall — across all budget segments — personnel budget was a $1.548 million elimination of the communications budget for the planned consolidated 911 River Valley Communications Center (RVCC) that was within the police budget.

“The RVCC will supplement operating costs for 2026 with the turnback funds from the state E911 program, which now come directly to Fort Smith,” Dingman wrote. “Since the November 10 study session, we are no longer pursuing construction of a new facility or implementation of new radios.”

Other large personnel cuts include a reduction of $579,311 from the Water Resources department for communications and training, a reduction of $473,515 from the police department’s field operations budget, and a reduction of $317,973 from the business operations budget of the Water Resources department.

Following are other items from Dingman’s memo to the board.

• “The proposed budget includes funding for all scheduled step raises for uniformed police and fire personnel. It also includes a 2.5% pay adjustment for all non-uniformed personnel, which as we have done the past few years will be implemented by the Board’s approval of a specific salary ordinance in the spring to take effect the first pay period in April.”
• “The proposed budget reduces the subsidy to the Fort Smith Convention Center by $235,000 to $559,392. The FSCC has reached agreement in principle with a naming rights sponsor for a portion of the facility over a number of years. That proposal is working through legal preparation and will be brought forward for Board consideration early in 2026.”
• “The proposed budget includes $233,742 in program funds for Miss Laura’s museum. This is a reduction of $34,581 from the program expenses as discussed at the November 17 hearing and anticipates that museum staff will coordinate efforts to initiate/secure a nonprofit organization for funding museum operations in the future. This does not include the capital project to replace/repair the building’s exterior siding.”
• “The proposed budget does include three new positions: an assistant prosecuting attorney, an Audio/Video Specialist, and an additional Neighborhood Services inspector.”

Link here for a PDF of the 17-page budget memo.