Fort Smith’s sales tax revenues had another strong month with revenues 9% higher than the same period last year. The city’s share of the Sebastian County sales tax brought in $ 1.79 million in city coffers in July, up 9.77% from the $ 1.63 million in July 2020, according to the city’s July sales tax report.

The figures in the July report reflect the transactions for June. In the 2021 budget, the city budgeted $ 1.63 million, the same amount as the sales tax generated in June 2020, so revenue is up 9.77% from budget.

In the first seven months of the year, the city raised $ 11.993 million from its share of the county’s sales tax, a 15.37% increase from the $ 10.395 million collected through July 2020 The city’s share of the county-wide tax is important as the revenue provides money for the city’s general fund budget, with much of that budget going to the police, firefighters and others. to other essential city services.

“Put simply, Fort Smith has a strong economy. People work hard and spend their money locally, ”said Jarred Rego, City Manager and Deputy Mayor. “On average, our revenues have increased by almost 10% compared to what we expected. Seeing these numbers higher than expected allows us to operate on a more precise budget basis as we plan for the year ahead. Additionally, it ensures that there is more money available to spend on community pillars like public safety, parks, and water projects.

Fort Smith’s 1% street tax – used for maintenance and new construction on streets, bridges and drainage – generated $ 2.23 million in July, a 9.9% increase from to the $ 2.01 million of July 2020. Again, the budget estimate was what the city did in June. last year, therefore, revenues were 9.9% higher than budget forecasts. So far for the year, the city has collected $ 15.072 million in tax, up 16.49% from the $ 12.938 million collected in the first seven months of 2020.

Director Neal Martin said the July sales tax report showed the city was doing well in 2021, noting that the increase in local spending and Internet sales tax could be the main drivers of the increase. numbers.

“(The high tax revenues) will definitely help with bigger projects, but we still need to budget carefully. I want to see a longer period of increased income before we change things too drastically. We need to give raises to our employees and take care of what we might not have been able to do in the past, while being very careful about how we spend the money that citizens have entrusted to us ”, Martin said.

While the increase in sales tax revenue is good for the city, it does not help pay for the work required by the consent decree. After years of failure to keep water and sewage infrastructure up to federal standards, the city entered into a federal consent decree with the United States Environmental Protection Agency (EPA) and the United States Department of Justice (DOJ) at the end of 2014. The consent decree required the city to carry out sewer upgrades worth an estimated $ 480 million over a period of 12 years. In June, Fort Smith’s utility manager Lance McAvoy told board members that due to inflation and the actual state of the city’s sewage system, that figure could be closer to $ 650 million. He said he didn’t have an exact estimate as there are still too many unknowns about the work needed.

The sales taxes that the city collects are 1% for streets and drainage which are supervised by the engineering department, 0.75% to repay bonds issued for water and sewer, and 0.25% which is divided 50/50 for the worse and parks departments, said city administrator Carl Geffken. Fort Smith receives more than 70% of the county-wide sales tax because the distribution of this tax is based on the city’s population relative to the total population of Sebastian County. The $ 18.3 million budgeted in 2021 from county-wide sales tax goes to the city’s general fund and the majority of the general fund supports the police and fire department budgets, which are respectively $ 17 million and $ 12 million.

“None of the sales tax revenue helps pay for the work of the consent decree. The 1% for Streets and Drainage pays for the paving of city-owned streets, part of the widening of Zero Street, major drainage projects, and new or renovated intersections and traffic lights, such as the new one. traffic light in Phoenix and 46th Street, ”Geffken said.

However, the 0.75% sales tax that pays the bonds paid for the water and sewer works and by issuing bonds, the city receives the funds in advance and pays bond holders over time, Geffken said.

The 0.25% sales tax split 50/50 between the fire departments and parks pays the staff at fire station 11 and allowed the purchase of a new pumper or ladder truck each. year (before the price increases of recent years). Parks Department funds fund things like the Riverfront Bike and Skate Park, the Greg Smith River Trail, the Parrot Island Water Park expansion, the trail system, the wading pool, and shade structures at Martin Luther Park. King and Tilles Park, Wilson Park’s playground and basketball courts and park improvements, Geffken said.

“When it comes to sales tax numbers, the July numbers show the City is doing well and will likely have another year of increased collection. When I review the details as far as we are allowed, the collections are up in all areas. We did not budget for any increases in 2021 in case the higher collections in 2020 were an anomaly, but they remained at the top level. We believe the higher sales tax collections indicate the well-balanced economic activity in Fort Smith which has held up well in 2020 and increased in 2021. The mix of manufacturing, healthcare, service and retail industries tourism to Fort Smith has performed well and has continued to grow. in 2021, ”said Geffken.

In 2020, Fort Smith’s share of Sebastian County’s 1% sales tax was $ 18.246 million, up 5.7% from 2019 and 5.52% from estimate city ​​budget. The 2020 total was $ 953,824 more than what city officials had planned to spend in the general fund budget. Tax has seen year-over-year gains over the past five years, but the 2020 jump was the largest seen during that time period.

The 1% street tax generated $ 22.66 million in 2020, up 4.02% from 2019 and 6.08% from the budget estimate. The 2020 total was $ 1.298 million more than what city officials had planned to spend on the street tax program.

PREVIOUS ANNUAL COLLECTION INFORMATION
Fort Smith 1% street sales tax collection
2020: $ 22.66 million
2019: $ 21.73 million
2018: $ 21,503 million
2017: $ 21,204 million
2016: $ 21,156 million

Fort Smith part of the 1% county-wide sales tax
2020: $ 18,246 million
2019: $ 17.265 million
2018: $ 17.043 million
2017: $ 16.691 million
2016: $ 16.58 million