Pace of growth in Fort Smith sales tax revenue slows in June report

Fort Smith sales tax revenues in June, while higher than collections last year, did not show the significant increase from last year’s revenues the city has seen in months prior. The city’s share of the Sebastian County tax was up less than 2% compared with June 2022.

June numbers reflect April’s transactions.

The June sales tax report shows the city’s share of the 1% Sebastian County sales tax totaled $2.069 million, up 1.8% compared to the $2.033 million reported in June 2022. The city estimated the revenue generated by the tax for the month would be $2.065 million, which means the collection came in 0.17% higher than budgeted.

“While the year over year increase from 2022 was small and less than the increase seen in other months of 2023, June of 2022 was a 15% increase over June 2021 in all categories. The comparison for 2023 is therefore against a very strong 2022 amount,” said City Director Lavon Morton. “I have not seen anything that makes me conclude that the Fort Smith economy is slowing down. I expect sales tax revenue to continue at a strong level, although the increase over 2022 amounts may be less than the increases in the early part of the year.”

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. The first half of 2023 showed revenue from the tax at $12.288 million, 5.4% higher than the $11.655 million the tax reported through June 2022.

Voters will go to the polls Aug. 8 to extend or end the 1-cent countywide sales tax in Sebastian County for another 10 years. The tax, which generated $33.768 million in 2022, is set to sunset June 30, 2024, without the extension. The tax is split among the city and towns in the county and the county itself based on population and makes up a big part of the budgets of many of the municipalities in the county.

Fort Smith’s 1% street tax – used for maintenance and new construction on streets, bridges and drainage – reported $2.542 million in June, up 1.45% from the $2.505 million reported in June 2022. The city budgeted the same amount the tax produced in revenue for 2022 for the 2023 budget. Through June, the tax has generated $14.998 million, 6.3% more than the $14.083 million reported in the first six months of 2022.

“The City sales taxes increased by 1.45% whereas the County sales tax ‘only’ increased 0.17% (over budgeted amount). Just a few short years ago, we were very happy to have had a monthly sales tax report showing a 1.45% increase,” said City Administrator Carl Geffken. “This still points to economic growth because the growth in sales tax to date is 3.10% over the 2022 sales tax collections. Monthly increases can vary, as they have in our case, but it is the annual growth figure that is important.”

In 2022, Fort Smith’s share of the 1% Sebastian County sales tax was $23.553 million, 9.6% higher than 2021 and up 9.05% from budget estimates for the year. The 2022 total was $1.955 million more than city officials budgeted to spend within the fund budget and $2.06 million, more than the tax brought the city in 2021. The 1% street tax generated $28.85 million, up 7.4% over 2021 and up 7.65% from budget estimates. The 2022 total was $2.05 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
2022: $28.85 million
2021: $26.667 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
2022: $23.553 million
2021: $21.49 million
2020: $18.246 million
2019: $17.265 million
2018: $17.043 million
2017: $16.691 million
2016: $16.58 million