Northwest Arkansas Democrat-Gazette
Sales tax revenue rises in Fort Smith
City official credits online ordering
SMITH — Fort Smith has reported gains in sales tax revenue amid the ongoing coronavirus pandemic.
The city released a link to its June sales tax report Thursday. In a change of pace from its April and May reports, revenue actually exceeded the budgeted amount for the month.
City Administrator Carl Geffken said that, for the first six months of this year overall, the city has exceeded last year’s collections and is surpassing 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 on July 1, 2019. Previously, only sellers with a physical presence in the state were required to collect the taxes.
Geffken also said that 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, combined with the extra $600 per week provided to unemployed people through the Coronavirus Aid, Response, and Economic Security Act, helped keep people spending as they would normally, Geffken believes.
He previously said that the initial estimates for the city were an 80% reduction in sales tax revenue 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 reduction of only about 7%, with Geffken estimating that the city had an overall decrease of about 2.5% in May.
Despite this, he noted that 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 has received.
During a news conference April 17, Geffken said he had asked city department heads for 10% across-the-board cuts in the budget, which at that point had finished being reviewed. Earlier that month, Geffken said he, city Finance Director Andrew Richards and Deputy City Administrator Jeff Dingman were reviewing these cuts, which will be presented to the city Board of Directors at a future date.
Geffken said in May that all departments had curtailed their spending as if the proposed cuts had already been implemented.
On Thursday, Geffken said that he needs to meet with Dingman and Richards, who have been active on other projects, one more time before bringing the proposed cuts to the directors. The board’s consent is required for any change to the budget.
Fort Smith’s current 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 at Fort Smith. Of the county’s 1%, Geffken said Fort Smith receives 70% to 75%.
The June Fort Smith sales tax report states that the 1% sales tax brought in $1,908,591, which was 7.41% higher than the amount that was budgeted for the month, $1,777,000.
The city’s 0.75% and 0.25% taxes also exceeded expectations, drawing $1,431,443 and $477,148 for excesses of 8.36% and 8.58%.
However, county sales tax revenue led the way, taking in 9.94% over budget for a total of $1,541,576. These numbers also surpassed what each of the taxes brought in during June 2019.
With six months of the year having come and gone, despite the pandemic these taxes have garnered more money than what was budgeted, according to the report.
The 1% sales tax, for example, has taken in a total of $10,910,053 so far, which is 0.93% more than the total budgeted amount for those months.
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 county sales tax revenue reached $8,767,250, or 2.85% more.