Budget review, data center rules, water work on Fort Smith Board agenda - Talk Business & Politics
A six-month budget review, the potential for increased data center development regulations, and $7. 1 million in proposed capital projects for water system improvements are some of the agenda items the. . .
A six-month budget review, the potential for increased data center development regulations, and $7. 1 million in proposed capital projects for water system improvements are some of the agenda items the Fort Smith Board of Directors will discuss Tuesday (Aug. 11). The quarterly budget reviews are part of a board focus to ensure annual budget goals are being met. After several months of budget talks between the board and city staff, the board in December 2025 approved a 2026 budget with $16. 904 million in reductions scattered through the city’s four operating funds – city’s general fund, water and sewer fund, solid waste fund, and streets and maintenance fund. The largest part of the budget cut came from removing 71 vacant jobs. The job cuts were estimated to reduce the budget by $4. 226 million. The initial 2026 budget projected an almost $8. 1 million deficit, with Chief Financial Officer Andy Richards then telling the board they needed to correct a “structurally imbalanced general fund budget” with “forever cuts. ” The city’s general fund pays for key services such as police, fire, and administrative management. The approved budget changes appear to be working. General fund revenue is up 4. 2%, with total expenses down 18. 1%. The general fund deficit at the end of June was $358,988, significantly better than the $6. 525 million deficit at the same period in 2025. Following are details from the city’s general fund budget, according to Richards’ six-month report. General Fund (January-June periods in each year)Revenue2026: $22. 94 million2025: $22. 014 millionExpenses2026: $23. 299 million2025: $28. 54 millionFund Balance2026: $24. 403 million (37. 5% reserve contingency)2025: $23. 228 million (29. 9% reserve contingency)DATA CENTER REGULATIONSA review of data center policies was requested by Directors Kevin Settle, with Director Christina Catsavis joining the request. Settle’s primary concern was with significant water usage by data centers. The development of data centers nationwide and in Arkansas has become controversial, with some communities around the country banning them, and some projects being withdrawn because of public opposition. However, Arkansas officials, with support from Gov. Sarah Sanders, have restricted local government actions on data centers. Arkansas Act 851 of 2023 prevents local governments from banning data center development. The law does not prevent local governments from adopting rules that create delays or significant restrictions with data center projects. The cities of Fayetteville and Little Rock have approved more stringent data center development rules. There are no known data centers being considered in the Fort Smith metro, but there are five large announced data center projects in the state. The facilities are either planned or in some stage of construction in Clarksville, Conway, Little Rock, Pulaski County, and West Memphis. The Fort Smith board in 2023 approved a zoning change that requires conditional use approval for data centers in “Industrial Light” zones, and “permitting them by right in Industrial Moderate (I-2) and Industrial Heavy (I-3) zones. ” In a recent memo to the board, Acting City Administrator Jeff Dingman said the city has a mechanism in place to review water use. “Additionally, the standardized surplus water user agreement requires written approval from Fort Smith for installation of any water meter larger than two (2) inches or any combination of meters capable of delivering a flow rate exceeding that of a two (2) inch meter on a contract water user’s system,” Dingman noted. “This language should cover a myriad of high-volume water users including data centers. ”WATER SYSTEM WORKRecommendations from city staff for a second round in 2026 of water system projects is estimated to total $7. 1 million. Following are the top projects in the request. • Luce water tank painting: $2. 25 million• Phase 5 segment of water transmission line from Lake Fort Smith: $2 million• Emergency neighborhood water system improvements: $1 million“Grant funds have been awarded for the Neighborhood Water System Improvements,” Todd Mittge, the city’s director of engineering, noted in a board packet memo. “Grant Applications have been submitted for consideration for the Lake Fort Smith Water Transmission Line Phase 5 (DCIP-$12,884,475. 20) and awarded for the Lake Fort Smith Transmission Line Phase 2A1 ($12,000,000. 00) as noted on the plan. If the CIP plan is approved, individual projects will be presented to the Board for approval as contracts are awarded. Staff anticipates bringing additional projects to the Board for approval as funding is identified and we continue to explore grant opportunities as a potential funding mechanism for future projects. ”If the new list is approved, it will be the second capital work plan the board has approved in 2026. The board on March 17 approve an estimated $5. 2 million for water system work that included $2 million for rehabilitation of a 20-inch water distribution line that crosses Interstate 540 near Euper Lane in Fort Smith, and $1 million to fix a large leak on the 30-inch water transmission line that crosses into Fort Smith and is attached to the U. S. 64 Midland Bridge. The city of Fort Smith facessignificant financial challengeswith its water system. The complex and expensive system needs include upgrades at the Lake Fort Smith water treatment plant in Mountainburg, Lee Creek water treatment plant upgrades, completion of a new water transmission line from Lake Fort Smith to the eastern side of Fort Smith, aging distribution lines in the city, and modern water meters for all customer categories. Water-treatment plans, and completion of a 48-inch water transmission line are estimated to cost between $328 million and $585 million, according to an August 2025 report to the board. That cost estimate does not include replacing aging water lines and modernization of water meters. Existing revenue is not near enough to meet funding needs. Related