City says it expects year-end surplus

FORT SMITH — Despite the coronavirus pandemic, the city of Fort Smith expects to conclude this year with a sizable surplus with its operating funds.

The Fort Smith Board of Directors reviewed and discussed the proposed 2021 operating budget for the city during an all-day budget hearing Friday.

During an overview of the budget at the beginning of the proceedings, City Finance Director Andrew Richards said he would agree with City Administrator Carl Geffken that the department heads did well with putting their proposed budget together for the following year, as well as with curtailing expenses during “this unprecedented year of 2020.”

“We did better as far as sales taxes than we anticipated, so we’re going to end up at the end of 2020 with healthy fund balances for all four of the operating funds because of that,” Richards said.

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. Geffken said in May that all departments had curtailed their spending as if the proposed cuts had already been implemented. The consent of the board of directors is required for any change to the budget.

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

However, although April and May sales tax revenue failed to meet the amounts budgeted for their respective months, 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. This was followed by the city taking in more sales tax revenue for June, July, August and September than what was budgeted for those months, as well as during those same months in 2019, according to reports from the city.

The proposed budget shows an estimated surplus of over $5.8 million for the 2020 fiscal year over the four operating funds. These funds consist of the city general fund, streets maintenance operating fund, water and sewer operating fund and sanitation operating fund.

“And actually, I would anticipate it being even better than that because what we have not factored into this is our opportunity to get about $3.4 million back from the CARES [Coronavirus Aid, Relief, and Economic Security] Act funding, … and from all indications, it looks like that we will be able to get all of that reimbursed most likely before the end of the year, so I’m anticipating it coming in before the end of the year and impacting that even further,” Richards said.

At-Large Position 7 Director Neal Martin said he believed the department heads and Geffken took appropriate measures to be able to cut expenses due to revenue drops anticipated at the start of the covid-19 pandemic, which is reflective of the surplus.

“So that $5.8 million surplus is really great coming through a really unknown year,” Martin said. “So thanks to you, Andy, thanks to Carl, and also thanks to the department heads for your willingness to sacrifice and make cuts when you might not have necessarily wanted to, but we felt like maybe we needed to at the time. So thank you guys.”

For 2021, Richards explained the city “rolled with” 2020 activities and tried to adjust accordingly.

“We stayed conservative as far as our revenue forecast with just minimal growth for our sales tax revenues and utility revenues and all those major revenues there,” Richards said. “I think what we’ve composed, I think all the operating funds are in good financial condition. The general fund, I think we do have a proposed budget deficit of about $1.3 million, which, we can look at that as the day goes through.”

The proposed 2021 operating budget outlined a $622,881 total deficit for the city’s operating funds in the 2021 fiscal year.

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