Fort Smith board talks 2021 budget

FORT SMITH — The city intends to take a conservative approach to its projected revenue next year in light of the covid-19 pandemic.

City directors discussed and established budget goals for 2021, among other topics, during a study session/budget workshop Tuesday.

Ward 3 Director Lavon Morton asked City Administrator Carl Geffken how the revenue for 2021 is being estimated due to this affecting how much can be spent on an individual department basis. Finance Director Andrew Richards said it will be taken “day by day” with the consideration the revenue has been “relatively steady” so far. This is particularly the case with sales tax revenue, although utilities have been down to a certain extent.

Richards said although the city isn’t seeing a huge impact the pandemic, “we’re going to continue to watch that.”

He said the city will be conservative when it comes to revenue, as well as cautious.

“And we may adjust it month to month if we see more of what’s happening,” Richards said. “We didn’t get the big V, the big dip and the rebound, that I feel like everyone was anticipating, and to some degree, we’ve seen increases over the same period the prior year lately. So I think we need to be cautious that, instead of a big V, we’re going to see a slow decline.”

Geffken said he believed keeping the general fund flat is the best route to follow, not knowing the impact of the pandemic and, hopefully, approval of a vaccine to “help life really return to normal.”

A city schedule of revenue for June lists the amount of sales tax revenue at more than $5.3 million, well over the budgeted $4.9 million. Similarly, the amount taken in year-to-date was more than $30.5 million — more than the budgeted $30.1 million.

In terms of utilities, which includes water and sewer, the schedule states the city took in $3.57 million in June against a budgeted $3.54 million. However, the year-to-date amount, more than $23.2 million, is far below the budgeted $27.2 million.

“Water and sewer is always the crapshoot for lack of a better word because at the first three to four months, utilities in 2020 was 15% down compared to ’19, about flat with ’18,” Geffken said. “However, in ’19, at the end of the year, total revenues were below 2018, and if we track closely to 2018, we will do well.”

In Geffken’s opinion, the city overestimated utility revenue for 2020.

The schedule of revenue also includes a section called intergovernmental, which includes state turnback and highway sales tax money. The year-to-date total was more than $3.4 million compared to the budgeted $3.7 million. Total franchise tax revenue yearto-date was more than $1.7 million against the budgeted $1.8 million.

“I think all the indicators make it look like we’ll have a very good 2021, but that frightens me because that could actually lead to a dip, and then we’ll be coming back to our department heads and saying, ‘Cut your budget,’ rather than have them think about it now, where they’ve been told that next year’s budget will be difficult, and that we have to have a balanced budget,” Geffken said.

In April, Geffken asked city department heads for 10% across-the-board cuts in the budget.

Geffken said in May all departments curtailed spending as if the cuts had been implemented. The board’s consent is required for any change to the budget.

“I think all the indicators make it look like we’ll have a very good 2021, but that frightens me because that could actually lead to a dip, and then we’ll be coming back to our department heads and saying, ‘Cut your budget’ ...”

— Fort Smith City Administrator Carl Geffken