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JPs told county's expenses on target, official says virus impact not severe

Official says virusimpact not severe by Thomas Saccente | July 27, 2020 at 4:04 a.m.

FORT SMITH -- Although Sebastian County has been impacted financially by the coronavirus pandemic, the damage so far has reportedly not been too severe.

Sebastian County Judge David Hudson presented the county Quorum Court with a midyear budget review for 2020 during its regular meeting last week. Hudson said the county needs to continue being careful with how it spends money for the rest of the year due to both the impact it has on the county's fund balance for budgeting for 2021 and uncertainty of the impact of the covid-19 pandemic.

Hudson said county budget expenses for midyear 2020 are on target, with 47% of the general fund budget having been expended as of June 30. This is the same amount that was reported to have been spent by June 30, 2019, according to Hudson's report. It is also in keeping with the budget expenses reported at that same point from 2012 to 2018, with the lowest being 46% in 2013 and the highest being 49% in 2012 and 2015.

Midyear general fund revenue for 2020, however, is down from where it was last year, something that Hudson attributed to the covid-19 pandemic. This revenue, as of June 30, is at 42% of budget estimates, although Hudson said this figure is "not dramatically off" compared to previous years. This includes 45% in 2019, 43% in 2018, 36% in 2017 and 44% in 2016.

"Now, some of that could be the influence of federal funding," Hudson said. "We know that stimulus money's gone out, and other assistance is out, so if that changes in the future, that could change some of the spending habits that relate to the sales tax."

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An itemized comparison of general fund revenue between 2019 and 2020 shows the total year-to-date actual revenue through June 30, 2019, as $10,128,398. Through June 30 of this year, the total year-to-date actual revenue was $9,818,233, signifying a difference of $310,165.

"That is, you know, $310,000 is money, but it's not a million dollars," Hudson said. "It's not half-a-million dollars. So that is somewhat encouraging information about where revenues are."

The two largest sources of revenue for Sebastian County's general fund, Hudson explained, are the county property taxes and county sales tax. Property taxes come in later during the year, October/November.

Property reappraisal notices were mailed on July 16, Hudson said. Sebastian County is in the fifth year of its current reappraisal cycle, which began in 2016, and will collect these taxes in 2021.

"So that becomes a revenue matter as we consider the 2021 budget planning," Hudson said. "You have to wait five years for that, and on the last consecutive four years, it's been newly discovered property and new construction ... where the growth has been in that tax source [property taxes]. Next year, it will be newly discovered property, new construction and reappraisal."

The next five-year reappraisal cycle will run from 2021 through 2025, Hudson said, with the county to see the revenues from that in 2026.

Hudson said county sales tax revenue is estimated conservatively, with 2020 revenue currently exceeding the estimate for the year.

"Now, we don't know if that has been influenced by the internet sales tax," Hudson said. "It probably has. The internet sales tax was going to increase sales tax revenue this year, as we talked about the last year, so that's coming into play on that. ... I don't know how much that's broken out for us to monitor in that level of detail, but that's been a positive, and that would be an area of revenue growth in the future as well, whenever things stabilize."

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.

A report included in Hudson's presentation lists the year-to-date total projected sales tax revenues for the first six months of 2020 at $1,845,824. The amount the county actually received was $1,969,215, which showcases a surplus of $123,391. This also surpasses the sales tax revenue the county received during the first six months of 2019, $1,929,141.

Hudson clarified that there is a two-month period of time between the sales tax revenue being collected and then received by the county. This means that the revenue that the county received in June was collected in April, the revenue it received in May was collected in March and so on. The county will receive the sales tax revenue collected in May this month.

Mervin Jebaraj, director of the Center for Business and Economic Research at the University of Arkansas in Fayetteville, previously told the Arkansas Democrat-Gazette that he was surprised by the state sales tax numbers from April.

"I and a lot of other people were expecting a much deeper hit, and we averted that," Jebaraj said.

Jebaraj said the April economy was supported by both the $1,200 federal stimulus checks and the extra $600 per week provided to unemployed people through the Coronavirus Aid, Response, and Economic Security Act.

The increased unemployment benefits are set to expire on Friday . When that money runs out, Jebaraj said it could be a very different story for the economy.

Hudson listed the county general fund unobligated balance as of June 30 at $70,853. However, the county is earmarking $50,000 for projected miscellaneous year-end appropriations, which brings the balance to $20,853.

Information for this article was contributed by Bill Bowden of the Arkansas Democrat-Gazette.


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