Fort Smith sales tax revenue sees slight monthly decline

For the first time all year, Fort Smith’s share of the Sebastian County 1% sales tax was down when compared to last year’s numbers, according to the September sales tax report the city posted Monday (Nov. 27). October’s numbers reflect September transactions.

The October sales tax report shows the city’s share of the 1% Sebastian County sales tax totaled $1.985 million, down 0.55% lower than the $1.996 million reported in October 2022. The amount, however, is 0.35% more than the $1.978 million the city budgeted to receive from the tax in October.

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 10 months of 2023 showed revenue from the tax at $20.635 million, 5.4% higher than the $19.584 million the tax reported in the first three quarters of 2022. Sebastian County voters renewed the tax, which generated $33.768 million in 2022, for another 10 years in a special election Aug. 8.

“Not since 2020 has a monthly sales tax collection in the current year been less than the prior year; however, for the next six months or so I expect flat to slightly positive growth in sales tax collections due to the continued growth in the Fort Smith economy and the FMS project being offset by a slowing economy, the restarting of student debt payments, and another increase or two in interest rates,” said City Administrator Carl Geffken. “Economic predictions are now leaning toward a soft landing for the economy, which will be good for Fort Smith and our region. The expansion and building at the Ebbing Air National Guard base and the beginning of the training mission will provide the next growth in sales tax collections.”

Fort Smith’s 1% street tax – used for maintenance and new construction on streets, bridges and drainage – reported $2.442 million in October, down 0.53% from the $2.455 million reported in October 2022. The tax revenues were 3.61% higher than the $2.357 million the city budgeted for the month. Through October, the tax has generated $25.062 million, 4.5% more than the $23.981 million reported in the first 10 months of 2022.

City Director Neal Martin said the sales tax numbers are something the board of directors and city administration will monitor.

“Every month up until this month, we have beat the 2022 numbers. … We are still going to have a better 2023 than 2022, so that shows that our economy continues to have strength,” he said.

Though the city’s sales tax had less revenue than it did in October 2022, the percentage over what the city budgeted for that revenue was better than it has been since May when the actual revenues were 6.76% over budget.

“The increase over budget for October is the best percentage over budget in several months. We are in a very good financial position on sales tax collections for all departments as we approach the end  of 2023,” said Fort Smith City Director Lavon Morton.

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