The City of Fort Smith reported a rebound in sales tax revenue in June, marking only the second time this year collections surpassed the same month in 2024. The increase comes as the city begins allocating a portion of tax revenue toward federally-mandated consent decree projects.
The city’s share of the Sebastian County sales tax was $2.077 million in June, up 0.53% from $2.066 million in June 2024, according to the June sales tax report posted by the city. The June county tax share, which measures May transactions, was down 1.44% from the $2.107 million forecast by the city.
The year-to-date countywide tax total for Fort Smith is $12.035 million, down 1.88% compared with the $12.265 million generated through the first half of 2024. That tax brought in $24.49 million in 2024, 0.95% lower than 2023.
The city’s share of the countywide tax is important because the revenue provides money for the city’s general fund budget, with much of that budget paying for police, fire, and other essential city services.
Fort Smith voters in May approved a sales tax reallocation plan to provide $360 million over 30 years to fund federally-mandated sewer system work. The vote potentially puts a frustrating and costly federal consent decree on a path to completion.
The vote reallocated a 0.75% sales tax first approved by voters in 2022 to pay for consent decree work and to pay bonds, with 0.125% used for the Fort Smith Police Department. It also renewed the 1% street tax but reallocated 0.625% for streets, bridges and drainage work, with the remainder of the tax to fund consent decree work and bonds. And it approved the authorization to use the tax revenue to issue bonds to pay for the work.
The county sales tax, of which the city receives a portion, remained unchanged as did a 0.25% city sales tax that funds the Fort Smith Fire Department and city parks.
Fort Smith’s 1% street tax – which is now split between maintenance and new construction on streets, bridges, and drainage and consent decree work and bonds – generated $2.513 million in June, 0.96% more than the $2.489 million generated in June 2024. The revenue was down 0.99% from the city estimate.
REVENUE RESPONSE
“We’re looking at this sales tax report as about even with the previous year. Yes we are slightly behind the previous year, but just slightly. We did not see the sales tax growth in the first half of the year that we projected in the 2025 budget, and of course we’d like to see at least a partial comeback in the second half,” said Jeff Dingman, acting city administrator.
With the new allocations of the tax, $2.094 million goes to streets, bridges and drainage, 0.98% less than the $2.115 million the city budgeted to come from the tax for that work in the month. The tax generated $418,909 for consent decree sewer work in the month, 0.98% less than the $423,070 the city budgeted the tax would generate.
“While the reallocation reduced the percentage of sales tax going to streets, I remain hopeful that economic growth will help close that gap,” said Director Lee Kemp. “We’ll soon begin reviewing how to best align our future street projects with available funding, so we can continue caring for our existing roadways and infrastructure without falling behind.”
The tax has generated $14.556 million since January, 1.4% less than the $14.763 million generated in the same time period in 2024. The tax revenue totaled $29.51 million in 2024, just below the $29.92 million in 2023.
“The (June report issued in July) was the first one to represent the reallocated sales taxes as approved by voters in May. We are able to use prior collections for some ongoing sewer projects, and last week the Board of Directors approved a resolution to start the process to issue the first series of Sales and Use Tax bonds for consent decree/sewer work. This process is on track to have project funds available and a number of Consent Decree projects under contract by the end of the year,” Dingman said.
The 0.75% sales tax that is split between consent decree work and the Fort Smith Police Department brought in $1.571 million in June for consent decree work, 0.96% more than the $1.555 million in June 2024, and $314,182 for the police, 1% more than the $311,081 generated in June 2024.
PREVIOUS ANNUAL COLLECTION INFO
Fort Smith 1% sales tax collection for streets
2024: $29.51 million
2023: $29.92 million
2022: $28.65 million
2021: $26.66 million
2020: $22.66 million
2019: $21.73 million
2018: $21.5 million
Fort Smith portion of 1% countywide sales tax
2024: $24.49 million
2023: $24.64 million
2022: $23.55 million
2021: $21.49 million
2020: $18.24 million
2019: $17.26 million
2018: $17.04 million
2017: $16.69 million