LITTLE ROCK — Little Rock officials are in the midst of crafting a 2012 budget that will include dozens of new jobs next year, thanks to a sales-tax increase voters approved in September, but millions in new funding won’t be available right away.
The city’s 1 percentage point tax increase doesn’t go into effect until Jan. 1. Little Rock won’t receive the first proceeds from it until March, making this budget cycle more about the timing of when to hire people rather than last year’s dilemma of where to cut.
For a while longer, thecity has to watch its spending. Finance Director Sara Lenehan will be making recommendations Tuesday on how to adjust this year’s budget to compensate for disappointing sales-tax collections and drops in utility franchise fees.
As of August, the most recent month for which figures are available, Little Rock’s $42.5 million in sales-tax collections put the city $951,580 behind in its budget. City officials don’t know why tax collections continue to fluctuate. Sales-tax revenue was up 3.49 percent in July compared with the same time a year ago, only to drop by 3.46 percent in August 2011 compared with August 2010.
“We’ve been all over the place this year. We’ve been up, and we’ve been down,” Lenehan said. “Nobody knows where to go with that.”
Sales-tax collections make up nearly half of the city’s $134.4 million budget.
“You might as well take a holiday and get out a crystal ball or a Ouija board,” Vice Mayor Dean Kumpuris told Lenehan during a financial discussion Tuesday, pointing out that 2012 sales-tax projections are going to be tough.
Assuming a 2 percent growth in sales-tax collections, the city expects the three eighths percent tax to raise $196 million over the next 10 years. The five-eighths percent tax should generate $31.6 million a year by 2015.
Even without the new sales-tax revenue in the bank, the capital city is in a better financial position than in the past two years when it had to make multiple budget adjustments to head off shortfalls.
The city surpassed its annual goal to save $5.5 million in payroll costs by keeping jobs vacant. That savings, along with better-than-anticipated license and permit fee amounts, will help offset missed projections in other categories. Lenehan doesn’t anticipate making any last-minute 2011 spending cuts.
City directors are expected to vote on budget adjustments Nov. 15, the same night they’ll get their first look at the 2012 budget.
Lenehan is still working on her 2012 sales-tax projections and, along with the city manager, is reviewing department funding requests.
“I definitely want to be somewhat conservative on my projections,” Lenehan said, in light of the city missing the mark on its projected 1.8 percent sales-tax growth this year. “I don’t want the revenue to be over-committed.”
Before the Sept. 13 special election, city directors passed a resolution detailing how much of the new sales-tax revenue would be spent.
Part of the plan includes replacing the city’s 27-year-old emergency communications system, building two new police stations and fire stations, while hiring dozens of additional officers and firefighters. The city will also fill park and code enforcement positions that went vacant for years as part of budget cuts.
City officials will start holding public hearings in the coming months to pin down details on where to spend some of the money, such as for road projects, but ideas for how to spend the money pop up every day.
Luke Skrable, a resident who frequents city board meetings, called on the board recently to allocate money to film a public service announcement to encourage the public not to shoot guns into the air.
Mayor Mark Stodola indicated that the city could use some of the tax revenue earmarked for trails to help finish the Arkansas River Trail, a 14-mile loop that has a gap in it along Cantrell Road. The city recently applied to the federal government for $11.9 million and would need to provide matching funds for the $14.5million project.
The city’s public works director, Steve Beck, recently mentioned fixing drainage problems in the Westchester neighborhood, and City Director Erma Hendrix has pushed the idea of tearing down more dilapidated houses.
“The number of people who I’ve encountered asking for funding has spent the money three times over,” Stodola said at a recent city board meeting.
Although the sales tax will eventually pay for dozens of jobs, Lenehan doesn’t anticipate filling every job next year. For instance, the city doesn’t need to hire anyone to work at the West Central Community Center until the center is built. No date has been set for the construction.
Meanwhile, the Police Department plans to run two recruiting classes next year to help fill its more than 40 vacancies that continue to increase as longtime officers retire.
Although the timing of new hires will be a “delicate balance” to figure out, Lenehan said she’s grateful.
“I just can’t imagine how difficult it would be if we had not had the sales tax passed,” she said.
Arkansas, Pages 15 on 11/06/2011