Fort Smith board adopts revised 2025 operating budget after votes restoring allocations and transit funds

The Fort Smith City Board of Directors voted on May 6 to adopt an ordinance amending the city's 2025 operating budget as presented and amended, after a series of motions that restored the 2024 cost-allocation percentages and rescinded proposed cuts to the public transit program.

City Chief Financial Officer Andy Richards told the board the packet included a proposed "projected" column that incorporates the cuts and instructions discussed in recent study sessions; he said the budget as amended would set the city's contingency reserve at about 17.7 percent, below the board's 20 percent policy threshold.

Why it matters: the board's actions determine department operations, vacancy management and the city's reserve level for the fiscal year. Members voiced particular concern about preserving public safety and utility finances while finding savings in other departments.

Richards summarized the packet and said the amendment would adopt the projected column as the new current FY2025 operating budget. Directors questioned whether additional shortfalls would be handled by a prorated reduction across programs or by administrative holds. Director Neil Martin said the administration's recommended administrative hold and department-level adjustments would be central if projected revenues underperform.

Board debate focused on three issues that produced formal amendments: the city's new cost-allocation formula, proposed transit cuts that would eliminate mostly federal grant-funded items, and a proposed vacant planning department position. The board voted first to retain the 2024 cost-allocation mix rather than adopt the newly proposed allocation model; that amendment passed unanimously.

A subsequent motion to rescind proposed transit cuts passed, restoring roughly $446,000 in recommended reductions; administration said about $337,500 of the $446,000 represented federal grant-driven dollars. A separate motion to rescind a planning department personnel cut (salary line ~ $67,000) failed after votes and a failed motion to reconsider.

Director discussion repeatedly returned to contingency policy and how administrative holds would be enforced. Richards and other staff said the administrative hold is directive from the administrator, not a formal board motion, but that it has been used successfully in prior years to reduce spending and avoid year-end deficits. Board members also noted vacancy savings would naturally accrue if positions remain unfilled.

The board approved the ordinance as amended (final roll call produced six votes in favor and one opposed). The adopted package removed the proposed reallocation to the new cost-allocation formula, and the transit cuts that had been included in the packet were not adopted. Director comments made clear the board expects departments to return with formal requests if operational shortfalls arise during the year.

Board actions and next steps include continued use of administrative holds as warranted, monitoring of contingency and reserve ratios, and a staff directive to bring any urgent operational shortfalls back to the board for legislative approval.

Ending note: Directors asked staff to provide clearer, graphical progress and financial metrics during upcoming study sessions so the board and public can track contingency, vacancy savings and the effects of any midyear adjustments.