Kyle Kellams: And it is Friday, so we have reached Michael Tilley with Talk Business & Politics to find out what we should be thinking about as we move into November. Hello, Michael.
Michael Tilley: I would discourage anyone from talking to me about what they should be thinking about as they move into November. Number one, let’s just get that out of the way.
Kellams: I didn’t have a chance to talk to you on Halloween last Friday. Did you have a good Halloween?
Tilley: I had a great Halloween. I’m getting where I love seeing these kids come to the door in their different costumes. I used to be a Halloween Scrooge. Now I love it.
Kellams: I have to tell you, I was in Hood River, Oregon, and White Salmon, Washington. They’re next door to each other with a river in between them. They both were charming little towns of, I don’t know, 8,000 people that shut down the downtown and had trick-or-treaters all over the place, and it was quite fun. And I’m really stretching the segue this time, Michael, to get to Oregon and Washington — I had to fly. Speaking of flying, good numbers for the Fort Smith Airport.
Tilley: You’re usually the king of segue. I may have to give you a B grade on that one.
Kellams: I think you’d be generous.
Tilley: Yes, but surprisingly, the enplanements — the people who travel out of Fort Smith Regional Airport — have been off to a slow start to begin the year. But September enplanements were up 17.6%, almost 18%, compared to September 2024. And between January and September, the numbers are up 1.7% compared to the same period in 2024.
What’s interesting is that in the third quarter of the year, enplanements were up around 7.5%. So those are good percentage gains, which hadn’t been there earlier in the year. I had a good conversation with airport director Andrew Meyer, and it’s kind of a, you know, from Field of Dreams, “If you build it, they will come.” Well, if you fly it, they will board, right?
Because American Airlines — the only carrier out of Fort Smith — added, according to Andrew, an extra daily flight during the month, and that accounts for that huge gain in September. The airport leadership has been working for a couple of years now to encourage American and some other airlines to add more flights, and their challenge has been, “If you’ll add the flights, people will fly.” And this is kind of proof that what they’re saying is correct.
Hopefully that will continue. The airport was on a growth trend in terms of enplanements prior to the COVID pandemic, but it’s struggled to get back to that number. I hate to pin a trend or hopes on one quarter of the year, but it’ll be interesting to see if this keeps going. Obviously, though, we’ve got the shutdown. We just learned yesterday that the FAA is going to reduce flights by, I think, 10% around the country, so the back half of the year is going to be worth watching.
Kellams: It’s been more than one quarter of a year that the city of Fort Smith has been concerned about making sewer improvements. The consent decree that came down said you had to do it. We now know that more than $50 million will be directed toward replacing or fixing more than 75,000 linear feet of sewer pipe.
Tilley: Yeah, that’s a lot. And 47 manholes. But yeah, you’re right. I may get some pushback from some city officials on this, but I think it’s the first kind of meaningful, consistent, plan-focused work that’s beginning to address this consent decree, which the city’s been under since 2014 — really 2015 in terms of active work.
Prior to this, the work was — I don’t want to call it haphazard — but it really only happened when the city could scrounge enough money together. But remember, back in May, voters approved a pretty broad sales tax change and shift. There were no new sales taxes, but they shifted some of the taxes they were collecting to raise money for this. So bonds were sold — $100 million in sales tax revenue bonds sold in late September to pay for this work.
So this Tuesday, the board approved this $50-plus million package. It was initially $77 million, but they’re holding a couple of projects because the contracts came in well above the initial estimates. There are some concerns about maybe some price inflation from out-of-town firms, and it’s a subject I plan to talk about later because it ties together.
The total cost estimate — which is still rough — is around $800 million for what it will eventually cost to finish this out. The city has really only spent about, I think, $49 million prior to 2015, and a little after that around $200 million on the work. So hopefully in the next two or three years, we’ll see more of this. I think there’s a plan by the city board to look at around $50 million or more per year in work that meets what the EPA and the DOJ want to see. So round one, we’ll keep watching.
Kellams: Let’s see. We got more people flying, we got more money for the sewers, we got more activity with building permits as well.
Tilley: Yeah. It’s another interesting surprise. We look at Fort Smith, Greenwood, and Van Buren permits — the value of those permits totaled $15.6 million in October, and that was up almost 40% compared to October 2024.
For year to date, January through October, those three cities have permitted a little over $247 million, and that’s up 20% from 2024. Now, we have to remember that we’re seeing the rebound we thought we’d see following a decline of 48% in 2024 compared to 2023.
Most of that gain we’re seeing so far this year — really all of it — is from Fort Smith. Fort Smith numbers are up 9.2% through the year. Van Buren numbers are down 13.5%, and Greenwood numbers are down just under 2%. So it’s Fort Smith carrying the weight of those numbers this year. In years past, it’s kind of been all cities up.
But one of the things I still hear is that there’s a potential capacity issue in terms of the number of construction companies, workers, and engineering firms. We’ve got this foreign military pilot center they’re building as we speak, the sewer work we just talked about, I-49 construction going on through the area, in addition to regular construction. That’s a lot of construction happening or about to happen.
And frankly, I’m surprised that the building permit numbers are up 20% through the year based on all that’s going on. I know there’s sometimes a never-happy group in Fort Smith that says nothing’s going on. Well, there’s quite a bit going on.
Kellams: Well, OK. So you and I have been talking — expect the numbers to go up because of the way trends are. One of the original things that Talk Business & Politics does is the Tourism Ticker, which takes a broad view of tourism revenue in the state. It’s down about 3% for the first six months of 2025. But I wonder if that’s because the pace had just been crazy upward, and this is just a very slight correction.
Tilley: Yeah, you’re right. You just can’t — something, especially economic numbers — can’t just keep going up all the time. And Arkansas’s tourism industry has been on a tear for more than a decade. Some might even argue two decades.
So the state’s 2% tourism tax for the first six months of the year, as you said, was a little over $13 million, down almost 3%. In part of our Tourism Ticker, we collect numbers from 17 Arkansas cities that we think are reflective of the tourism industry in the state. Their hospitality tax revenue was down just under 2%.
The one highlight for this report was that the gain in the monthly average of Arkansas tourism jobs was up 1.3%. So yeah, it’s kind of taking a breath. As you said, at some point, we know instinctively that the numbers can’t keep going up.
Also, 2024 was a big year with a lot of activity. There was a two- or three-month period with the solar eclipse that helped boost numbers. But look, nobody’s panicking, though there is a little bit of caution out there. We’re hearing more reports that consumers are reducing their nonessential spending. Travel and eating out are nonessential.
Of the 17 cities we surveyed, their prepared food tax was down 1.4%, hotel tax collections were down 3.2%. One of the things — and I know it’s our survey — but one thing I wish we could do a better job of, and I’m not sure there is a way, is accounting for hotel room rates. Hotel tax collections are based on room fees, and those fluctuate wildly. If you ever understand why they do that, please let me know.
Sometimes it’s not necessarily a reflection of activity — it could be a reflection of room rental prices. But that was down. Anyway, the numbers are still good. I’m not being a cheerleader, that’s just the reality. We’ll watch to see if the trend continues downward and if those percentage declines grow larger. If we see that, then there might be some room for concern.
Kellams: All right. You can read about all of this at talkbusiness.net. Michael Tilley, thank you so much.
Tilley: You’re welcome, sir. Always enjoy it.
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