Fort Smith Board approves airport support, sales tax advisory committee

The Fort Smith Board of Directors approved a resolution Tuesday night (March 15) that pledges $100,000 for the purpose of getting a second airline service into the Fort Smith Regional Airport.

Airport officials are applying to the U.S. Department of Transportation for a Small Community Air Service Development Program grant, according to a memo from Deputy City Administrator Jeff Dingman.

The grant will allow airport administration to subsidize airline service for a period of time in order to add another air service destination other than Dallas. There are now five flights a day scheduled from Fort Smith to Dallas via American Airlines.

“The Airport’s goal is to regain eastern service, but in the current market, the most feasible and cost effective target for the grant is American Airlines service from Fort Smith to Chicago. Chicago is considered an eastern hub because of the locations it serves in the eastern part of the United States,” Dingman said.

Airport Director Michael Griffin said in the project description for the application that the grant would help restore service to a second hub similar to what it had prior to the COVID-19 pandemic.

“The Fort Smith Regional Airport (FSM) has been hit harder than most by air service reductions related to COVID-19. FSM’s current service is limited to one hub. Due to the pandemic, Delta Air Lines ceased service at FSM, resulting in a reduction in flights at FSM of 38 percent and seats of 42 percent in 2021 compared to 2019, a significantly higher reduction than the rest of the nation,” Griffin said in the application. “A public-private partnership has been formed, there is a significant non-airport contribution, and American Airlines supports this air service initiative as shown in their letter of support.”

The grant is for $1 million. It requires $200,000 in matching funds. One of the grant stipulations is a pledge of “community support” for a percentage of the grant, Dingman said. The grant also stipulates the airport cannot pay the $200,000. The city would pay $100,000 of that community support. The remaining $100,000 would come from other community support. City Director Carl Geffken said the Fort Smith Regional Chamber of Commerce has said they would pledge around $20,000 to $25,000.

The city will not pay any funds unless the grant is awarded. If the airport does receive the grant, the funds will come from the city’s general fund, Geffken said.

“When we lost one of our providers, it really hurt the ability to travel with efficiency, and we lost a lot of business … to Northwest Arkansas, to Dallas and to Tulsa,” said Director Robyn Dawson. “Anything the board can do to help stimulate getting major carriers back (is good). While I know $100,000 is a lot, … I think the economic impact overall will much surpass the $100,000 investment.”

Directors Neal Martin and Kevin Settle reminded the board that this is the type of reason why the city has budgeted conservatively the past few years and built up the emergency fund. Director Lavon Morton mentioned that this would be for Fort Smith commercial service, not military service or missions.

Air travel is slowly returning to Fort Smith, but at levels still well below those prior to the COVID-19 pandemic. Enplanements at the Fort Smith Regional Airport in 2021 totaled 45,218, up 22.8% compared with 2020 but 50.8% below the pre-pandemic year of 2019.

SALES TAX COMMITTEE
In other business, the board approved an ordinance creating a Sales Tax Review Committee of nine members with three ex-officio members to review revenues from the various sales and use taxes approved by Fort Smith voters, as well as the expenditures associated with those funds.

“This is an effort to expand the transparency and accountability for the use of these funds,” Dingman said in a memo regarding the committee.

The committee will review expenditures from all the city’s sales tax funds quarterly. It would meet quarterly, once to review the revenues and expenditures and once to approve the minutes and report that will be sent to the board of directors.

The city now levies a 1% sales and use tax for the streets, bridges and associated drainage capital improvement program. It also levies a total of 1% in sales and use taxes that on May 24, will be considered for renewal by Fort Smith voters. If approved, the total sales tax rate in the City of Fort Smith would remain at the current 9.5%, and revenues from the renewed/extended city sales and use tax would be allocated as follows: 1/8 cent to Fire Department needs (8-year extension of 2012 tax), 1/8 cent to Parks Department Capital Improvement Projects (8-year extension of 2012 tax), 1/8 cent to Policy Department needs (8 year tax), 5/8 cent to Wastewater Consent Decree (8 year tax).

In addition, the city receives an allocation of the county-wide 1% sales and use tax levied by Sebastian County. The allocation is determined by percentage of population within the county.