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Fayetteville reports modest sales‑tax gains; city still faces $3 million budget shortfall
Summary
CFO Steven Dotson told the council that May taxable sales totaled about $287 million, a 5.5% year‑over‑year gain, with year‑to‑date sales tax above budget by roughly $688,000—but he said it remains unlikely the city will fully erase a planned $3 million General Fund deficit this year.
CFO Steven Dotson reported to the Fayetteville City Council on Aug. 19 that taxable sales in May totaled about $287,000,000, a 5.5% increase over May 2024. Dotson said the gain was led by construction, information, and transportation/warehousing sectors and that the City 1‑cent sales tax was up about 5.4% month‑to‑month (roughly $143,000).
Dotson told council that combined city and county sales tax collections for May were up about 5.5% (approximately $261,000) versus May 2024, and that year‑to‑date the combined collections are about 5.44% higher (roughly $1.5 million). Compared to the adopted 2025 budget, he said sales‑tax receipts are up about 2.37% year‑to‑date (≈$688,000).
“I just mentioned that 2.37% or that 680,000 for sales tax,” Dotson said, adding that while the figures are positive, sales tax is only one component of General Fund revenue. He noted the 2025 budget was adopted assuming a $3 million General Fund shortfall and that current gains reduce, but do not eliminate, that planned deficit.
Councilmembers asked for forward‑looking forecasts. Councilperson Moore asked whether current momentum could continue through the year, and Dotson said he was cautiously optimistic because the city is approaching busier months—University of Arkansas athletics and the fall semester—but he would not guarantee future results.
On the June financial report Dotson also reported the General Fund was up about 1.5% versus budget through June (≈$557,000); building permits were up about 16% (≈$261,000) year‑to‑date; franchise fees rose; and water and sewer charges were up about 2% (≈$384,000).
Council members followed with technical questions about the deficit math, revenue composition and how much of an ongoing improvement in sales tax would be required to remove the budgetary gap. Dotson reiterated that while collections are improving, the city’s reserve balances were a buffer when the budget was adopted and full recovery of the $3 million gap in 2025 remained uncertain.
What’s next: Dotson said staff will monitor collections monthly and report updates to the council; no policy changes were proposed at this meeting.
