Year-to-date Fort Smith sales tax collections are down 6.92%

Fort Smith sales tax collections continue to decline, with the one-percent street tax in May generating $1.52 million, down 6.92% compared to May 2008.

For the first five months of 2009, the city sales tax is down 2.19% compared to last year.  When comparing year-to-date budget figures, the city sales tax is 3.43% lower than projections, according to a report from Kara Bushkuhl, finance director for the city of Fort Smith.

Bushkuhl also reported that the city’s share of the county 1% sales tax ($1.24 million) decreased 6.98% compared to the receipts for May 2008. The receipts reflect a 2.79% decrease when compared to the estimated May 2009 budget figure. Year-to-date, the county sales tax is down 2%. The county sales tax for the first five months of 2009 lags behind the projected budget by 3.31%.

“The actual revenue loss to the General Fund budget is $224,039 to date. As stated in last month’s report, all departments have been asked to review expenditures very carefully and keep spending as low as possible. Depending on next month’s revenues, it may be necessary to adjust the 2009 General Fund budget,” Bushkuhl noted in a memo.

Fort Smith city directors at their July 7 board meeting cited a concern with potential budget problems in developing the 2010 budget. Directors Cole Goodman and Kevin Settle made it clear that the board wants to begin sooner rather than later what is expected to be a tough 2010 budgeting cycle.

Budget problems are potentially two-fold. Within the next 2-3 years, elimination of state turnback funds to support the Fort Smith Convention Center might require a potential budget expenditure of as much as $1.5 million in 2011, and between $1.8 million and $2 million for subsequent years.

Also, recent sales tax collections suggest the possibility of a $500,000 loss in 2009 revenue compared to 2008, according to Deputy City Administrator Ray Gosack.