Editor’s note: This story is a component of The Compass Report. The quarterly Compass Report is managed by The City Wire and is sponsored in the Fort Smith area by Arvest. Supporting sponsors of The Compass Report are Cox Communications and the Fort Smith Regional Chamber of Commerce.
Revenue from Fort Smith’s street tax fell more than 5% in the June report after posting a double-digit increase in May. The countywide tax revenue that feeds the city’s general fund fell more than 6% in the July report, but remains above the year-to-date budget forecast.
The city has in the first six reporting months of 2015 collected $10.511 million on its 1% street tax program and the same amount on a 1% tax divided between bonds, Fire Department and the city’s Parks Department. The amount is up 4.83% compared to the same reporting period in 2014, and is 5.66% above the budget estimate.
The city’s 1% street tax program collected $1.744 million in the June report, down 5.47% compared to June 2014. The amount was 4.88% below the budget estimate. (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 to cities in July are from taxes collected in May and transferred by merchants to the state in June.)
The key collection for the city is its portion of the 1% countywide sales tax. Revenue from that tax funds a majority of the city’s general fund budget, with much of that budget paying for police, fire and other essential city services.
The city’s portion of the countywide 1% sales tax generated $1.338 million in the June 2015 report, down 6.24% compared to June 2014, and was 6.07% below the budget estimate.
For the first six reporting months of the year, the city’s portion of the countywide tax revenue is $8.069 million, up 3.75% compared to the same period in 2014. The revenue for the first six months is also 4.06% above the budget estimate.
The increase in year-to-date countywide tax revenue provides some relief as the Fort Smith Board of Directors and city staff are working on ideas to address a looming shortfall in the city’s contribution for police and fire employee pensions. The city needs $900,000 in this fiscal year to help cover pension fund obligations, and the annual deficit could grow to $3.1 million by 2026 if no remedy is found.
TAX TRENDS
Countywide sales tax revenue to the city hit a record in 2008 with $16.61 million. It fell to $14.89 million in 2010, but has posted four consecutive years of gains since 2010, with the 2014 total reaching $15.625 million.
Collections during 2014 of the Fort Smith’s 1% sales tax for the street program topped $20 million for the first time since 2008. The 1% tax generated $20.099 million for the January-December reporting period, up 3.24% over 2013, and was above the budget estimate by 0.78%. However, collections for the past five years have been inconsistent. Revenue from the city’s street tax was down 0.87% in 2010, up 3.9% in 2011, up 1.36% in 2012, and down 0.69% in 2013.
PREVIOUS ANNUAL COLLECTION INFO
Fort Smith 2% sales tax collection (1% for streets; 1% for water/sewer bonds)
2014: $40.198 million
2013: $38.938 million
2012: $39.210 million
2011: $38.683 million
2010: $37.229 million
2009: $37.554 million
2008: $41.226 million
2007: $37.858 million
2006: $36.840 million
Fort Smith portion of 1% countywide sales tax
2014: $15.625 million
2013: $15.353 million
2012: $15.279 million
2011: $15.15 million
2010: $14.89 million
2009: $15.04 million
2008: $16.61 million
2007: $15.15 million
2006: $14.71 million