Fort Smith, county sales tax revenue up for three consecutive months

Sales tax collections in Fort Smith and Sebastian County have seen three consecutive months of comparative increases, but the revenue is still down compared to 2009.

Each of the city’s 1% sales taxes (1% for streets and 1% for water and sewer projects) collected $1.627 million in June, up 3.99% from the same period in 2009. The collections also were up 3.24% compared to budget estimates. (Because the state of Arkansas has a two-month delay in reporting collections back to the cities, the city of Fort Smith — for budgeting purposes — has historically reflected the collections on a one-month delay. Which is to say, the tax collections remitted to cities in August are from taxes collected in June and transferred by merchants to the state in July. However, the city records the August remittance from the state of taxes collected in June on its July report.)

For the first seven months of 2010, each of the 1% taxes have collected $11.025 million, down 1.95% from the same period in 2009. That year-over-year rate of decline has dropped from 7% for the first two months of 2010, 6.79% for the first three months of 2010, and 2.9% for the first six months.

The city’s portion of the one-cent countywide sales tax was $1.315 million in the July report, up 0.21% from the same period in 2009. For the first seven months of 2010, the city has collected $8.884 million on its portion of the countywide tax, down 2% from the same period in 2009. The countywide year-over-year rate of decline has dropped from 5.6% for the first two months of 2010, 5.39% for the first three months of 2010, 4.79% for the first four months and 2.46% for the first six months.

The countywide tax collection is critical because the revenue is a little more than 40% of the city’s general budget of roughly $40 million. A majority of the general fund budget general supports fire, police and other critical city functions.

The Fort Smith board of directors on July 20 approved budget cuts of more than $1.53 million to address a growing shortfall in revenue. The biggest part of the budget cut involves a $1,176,470 reduction in payments into the city’s health and wellness fund. A hiring freeze on 10 vacant positions will pull another $353,610 from the budget, and no longer providing meals at board study sessions will save an estimated $1,700 a year.

Sales tax collections in the region and the city of Fort Smith began to show weakness in the second quarter of 2009. That weakness abated somewhat but continued into the second quarter of 2010. The tax collections, which are good indicators of regional consumer confidence, were up in Crawford, Franklin, Logan and Sebastian counties — $3.217 million in May 2010 compared to $3.129 million in May 2009.

“Sales and use tax collections provide an insight into both the total income and change in total income in an area as well as how consumers are responding to new information about the health of the national and local economy. Obviously, this measure is tied to retail activity,” noted the first quarter 2010 issue of The Compass Report — the region’s first comprehensive economic analysis and presented by Fort Smith-based Benefit Bank.

2010 SALES TAX COLLECTIONS
Countywide sales tax collection (with % comparison to 2009 month)
July 2010: $1.315 million (0.2%)
June 2010: $1.262 million (4.09%)
May 2010: $1.256 million (1.09%)
April 2010: $1.308 million (-3.03%)
March 2010: $1.160 million (-4.90%)
February 2010: $1.140 million (-2.33%)
January 2010: $1.439 million (-8.05%)

Fort Smith sales tax collection
July 2010: $1.627 million (3.99%)
June 2010: $1.578 million (5%)
May 2010: $1.555 million (1.47%)
April 2010: $1.646 million (-2.56%)
March 2010: $1.429 million (-6.28%)
February 2010: $1.398 million (-3.23%)
January 2010: $1.789 million (-9.77%)

PREVIOUS ANNUAL COLLECTION INFO
2% sales tax collection (1% for streets; 1% for water/sewer bonds)
2009: $37.554 million
2008: $41.226 million
2007: $37.858 million
2006: $36.840 million

Fort Smith portion of 1% countywide sales tax
2009: $15.04 million
2008: $16.61 million
2007: $15.15 million
2006: $14.71 million