Slower commerce reflected in sales tax collections

Commerce continues to slow in Fort Smith, with May transactions showing a more than 8% decline compared to May 2008.

Fort Smith Director of Finance Kara Bushkuhl reported Tuesday (July 28) that June’s one-cent street tax collection totaled $1.503 million, down 8.68% from the same period in 2008. The city’s portion of the one-cent countywide tax was $1.212 million, down 9.25% from the same period in 2008.

(Because the state of Arkansas has a two-month delay in reporting collections back to the cities, the city of Fort Smith — for budgeting purposes — has historically reflected the collections on a one-month delay. Which is to say, the tax collections remitted back to the cities in July are from taxes collected in May and transferred by merchants to the state in June.)

“For the first half of 2009, the city sales tax is down 4.55% compared to last year. When comparing year to date budget figures, the city sales tax is 4.29% lower than projections,” Bushkuhl explained in her report. “The actual revenue reduction for the street sales tax budget and for the sales and use tax bond budget is $433,809 each.  The street sales tax fund should have a sufficient contingency to cover this amount and the lower revenue for the bond fund means that fewer bonds may be called.”

The potentially troublesome trend is the reduced funding from the city’s portion of the countywide tax. That tax contributes more than 40% to the city’s operating budget. The county sales tax for the first half of 2009 is 4.06% less than projected, with an actual revenue loss to the budget at $327,976. 

The Fort Smith Board of Directors have set Aug. 17 and Aug. 25 as dates to review what might be a problematic 2010 budget cycle. Each meeting will begin at 6 p.m. and will be held at the Elm Grove Community Center at Martin Luther King Park.

PREVIOUS COLLECTION INFO
2% sales tax collection (1% for streets; 1% for water/sewer bonds)
2008: $41.226 million
2007: $37.858 million
2006: $36.840 million

Fort Smith portion of 1% countywide sales tax
2008: $16.61 million
2007: $15.15 million
2006: $14.71 million