Fort Smith sales tax tally up in January

Sales tax collections in Fort Smith were up again in January, marking the fourth straight month of year-over-year gains.

Not since the February 2009 report ended a nine-month string of year-over-year gains have Fort Smith sales tax collections posted at least four consecutive monthly gains.

Each of the city’s 1% sales taxes (1% for streets and 1% for water and sewer projects) collected $1.428 million in the February report, up 2.1% from the same period in 2010. The collections were up 0.59% 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 March are from taxes collected in January and transferred by merchants to the state in February. However, the city records the March remittance from the state of taxes collected in January on its February report.)

Fort Smith’s share of the county 1% sales tax in the February report is $1.12 million, down 1.78% compared to February 2010. The collection was down 4.55% compared to the revenue estimate.

Kara Bushkuhl, director of finance for the city, noted in a memo to City Administrator Ray Gosack that the decline in countywide tax collections reflects change in population from the 2010 Census.

According to a previous report from Bushkuhl on the population change, revenue to the city has averaged 69.8% of the total distribution of the Sebastian County 1% tax. However, the city’s 2010 census population is now about 68.6% of the county’s 2010 census population. Countywide tax proceeds in 2010 totaled $21.348 million, with the city’s share reaching $14.892 million.

Unfortunately, the countywide decline in the February report ended what was four months of consecutive year-over-year gains.

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.

Sales tax collections in the region and the city of Fort Smith began to show weakness in the second quarter of 2009. That weakness began to improve in the second quarter of 2010, slipped somewhat in the third quarter compared to the same period in 2009, but began to again see positive trends in the fourth quarter.

PREVIOUS ANNUAL COLLECTION INFO
2% sales tax collection (1% for streets; 1% for water/sewer bonds)
2010: $37.229 million
2009: $37.554 million
2008: $41.226 million
2007: $37.858 million
2006: $36.840 million

Fort Smith portion of 1% countywide sales tax
2010: $14.89 million
2009: $15.04 million
2008: $16.61 million
2007: $15.15 million
2006: $14.71 million