Fort Smith officials surprised by drop in May sales tax revenue
by June 26, 2025 6:52 pm 732 views
Fort Smith city administration is a bit worried and confused by lower than anticipated sales tax revenue in the May report, and plans to seek more information from state officials about the disappointing tally.
“Sales tax receipts for May 2025 are concerning, being 8.7% below budget projections,” said Acting City Administrator Jeff Dingman. “Based upon the news from the state we were expecting an increase over May 2024, but that didn’t happen.”
The city’s share of the Sebastian County sales tax was $1.901 million in May, down 5.52% from the $2.012 million in May 2024, according to the May sales tax report posted by the city. The May county tax share, which measures April transactions, was down 7.35% from the $2.052 million forecast by the city.
Dingman noted that Arkansas’ statewide sales and use tax collections were up 5.5% in May and 2.2% above budget estimates, Dingman said. The state reported that key drivers for the increase included gains in retail trade, utilities, manufacturing, and motor vehicle sales.
“Our own comparison of NAICS distribution of sales from May 2024 to May 2025 shows that we should have seen a slight increase in overall sales tax collections, so there is not a clear explanation or any reason to understand why Fort Smith’s collections for May 2025 should be that far behind the estimate,” Dingman said.
He said the city intends to visit with the the Arkansas Department of Finance and Administration about the May report.
The year-to-date countywide tax total for Fort Smith is $9.959 million, down 2.35% compared with the $10.199 million generated through May 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’s 1% street tax – used for maintenance and new construction on streets, bridges, and drainage – generated $2.282 million in May, a 6.9% decrease from the $2.451 million generated in May 2024. The revenue was down 8.73% from the city estimate. The tax has generated $12.043 million so far in 2025, 1.88% less than the $12.274 million generated in the same period of 2024. The tax revenue totaled $29.51 million in 2024, just below the $29.92 million in 2023.
“Overall, we are still at around 1.5% behind budget projections for the year,” Dingman said. “Of course we would prefer to see a positive trend, but we consider this fairly even. Some years these distributions even themselves out from month to month. Although not yet cause for alarm, we certainly don’t want to see a trend of decreasing sales tax receipts.”
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