Fort Smith’s share of countywide tax up 11.3% in September report

Fort Smith’s sales tax revenue continues to be strong. The city’s portion of the Sebastian County sales tax totaled $2.019 million in September, up 11.31% compared with September 2021. September’s report reflects sales tax collections from July.

The countywide sales tax generated roughly $17.587 million in the first three quarters of the year, 12.6% higher than the $15.614 million generated through September 2021. 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 budget paying for police, fire and other essential city services.

Fort Smith’s 1% street tax – used for maintenance and new construction on streets, bridges and drainage – generated $2.454 million in the September distribution, up 12.59% from the $2.18 million reported in September 2021. Through September, the city has collected $21.526 million from the street tax, about 10.48% more than the $19.484 million collected through the third quarter last year.

City Administrator Carl Geffken said he questioned the higher than expected sales tax revenues beginning in 2020 because there was nothing to explain the increase other than the stimulus payments put in place to maintain the economy and income in case of an initial drastic drop in the economy due to the COVID-19 pandemic. However, after two months in early 2020 when the economy dropped, the economy recovered and began the higher than expected and budgeted sales tax collections, Geffken said.

“Now that the stimulus payments are behind us, including the CARES Act funds Fort Smith received and now most of the ARPA funds, the economy in the River Valley region is strong and poised for continued growth based on the record number of building permits issued, economic development projects moving forward, and the future FMS project,” Geffken said. “It was also welcomed news that the overall economy grew at 2.6%.”

He said after 30 months of consistent growth in Fort Smith’s sales tax collections and in sales tax collections in many of its sister cities in Arkansas, the administration will continue to incorporate the higher sales tax collections in future budgets.

In 2021, Fort Smith’s share of the 1% Sebastian County sales tax was $21.055 million, 15.4% more than 2020 and up 18.14% over the city’s budget estimate. The 2021 total was $3.23 million more than city officials budgeted to spend within the general fund budget. The tax has posted year-over-year gains over the past several years, but 2021’s jump was the largest seen during recent years.

The 1% street tax generated $26.134 million in 2021, up 15.4% over 2020 and 17.42% over the budget estimate. The 2021 total was $3.877 million more than city officials budgeted to spend on the street tax program.

PREVIOUS ANNUAL COLLECTION INFO
Fort Smith 1% sales tax collection for streets
2021: $26.134 million
2020: $22.66 million
2019: $21.73 million
2018: $21.503 million
2017: $21.204 million
2016: $21.156 million

Fort Smith portion of 1% countywide sales tax
2021: $21.055 million
2020: $18.246 million
2019: $17.265 million
2018: $17.043 million
2017: $16.691 million
2016: $16.58 million