Fort Smith sees gain in sales tax revenue

FORT SMITH — The city reported gains in sales tax revenue amidst the ongoing coronavirus pandemic.

The city released its June sales tax report Thursday. In a change of pace from its April and May reports, revenue exceeded the budgeted amount for the month.

City Administrator Carl Geffken said, for the first six months of this year, the city exceeded last year’s collection year-to-date and is exceeding overall compared with its budget.

“Now, am I surprised at that,” Geffken said. “Yes, at the size of the increase for the month, but we also know that June primarily reflects April’s business activity, and April was a month where a lot of people were at home. They were doing a lot of online ordering, and thankfully, I think, that’s reflected now in our sales tax.”

Arkansas began requiring all online sellers to collect and remit state and local sales taxes in 2019. Prior to this, only sellers with a physical presence in the state were required to collect and remit the taxes.

Geffken also said if people were going to get a tax refund, they should have received it by April, if not March. People received $1,200 federal stimulus checks in April as well, which Geffken believes, combined with the extra $600 per week provided to unemployed people through the Coronavirus Aid, Response, and Economic Security Act, helped to have people continue purchasing as they would normally.

Geffken said initial estimates for the city were an 80% reduction in April and May, a 50% reduction in June and July, and a return to normal in August. This would signify an overall reduction of 22% in sales tax revenue for 2020.

April’s sales tax report saw a revenue reduced about 7%, with Geffken estimating the city had an overall decrease of about 2.5% in May.

Despite this, Geffken said the city still has another six months to go in the year.

“And it will be telling to see what happens in July’s numbers that will reflect May, and so on,” Geffken said. “I’m still concerned that there will be months where we will be under our initial budget, and … we have adjusted with budget cuts.”

There are still enough unknowns out there, Geffken said, that the city needs to be prudent, as well as grateful for the sales tax revenue it received.

During a news conference April 17, Geffken said he asked city department heads for a 10% across-theboard budget cut, which at that point had finished being reviewed. Earlier, Geffken said he, city Finance Director Andrew Richards and Deputy City Administrator Jeff Dingman were reviewing the cuts, which will be presented to directors at a future date.

Geffken said in May all departments curtailed pending as if the proposed cuts had been implemented.

On Thursday, Geffken said he needs to meet with Dingman and Richards, who have been active on other projects, once more before bringing the cuts to directors for approval. The board’s consent is required for any change to the budget.

Fort Smith’s tax rate is 9.75%, 2% of which is for the city. Of this amount, 1% is dedicated to streets, drainage and bridges, 0.75% is for redemption of sales and use tax bond issues, and 0.25% is for Fire Department and parks operations as well as capital projects, according to the city’s finance department.

Of the remainder, 6.5% goes to the state and 1.25% to Sebastian County. The latter is split between 1% for public safety, public library, parks capital maintenance, senior citizen programs, downtown development and projects, public transit and privilege license replacement; and 0.25% for the University of Arkansas-Fort Smith. Of the county’s 1%, Geffken said Fort Smith receives 70% to 75%.

The June sales tax report states the 1% sales tax brought in $1,908,591, which was 7.41% higher than budgeted for the month, $1,777,000. The city’s 0.75% and 0.25% taxes also exceeded expectation, drawing $1,431,443 and $477,148 respectively for excesses of 8.36% and 8.58%. However, county sales tax revenue took in 9.94% over budget for $1,541,576. These numbers also surpassed what each of the taxes brought in during June 2019.

These taxes have garnered more money than budgeted, according to the report. The 1% sales tax, for example, has taken in $10,910,053 so far, which is .93% more than the budgeted amount. Meanwhile, the 0.75% tax has brought in $8,182,539, or 1.21% more, the 0.25% tax got $2,727,513, or 1.21% more, and the county sales tax revenue reached $8,767,250, or 2.85% more.