LITTLE ROCK — Revenue from the 1 percentage-point increase in Little Rock’s citywide sales tax that was approved in September is on par with the city’s projections, according to the first revenue report released by the state Department of Finance and Administration.
The increase, which went into effect in January, raised the overall city sales tax rate to 8.5 percent, with 6 percent dedicated to the state, 1 percent dedicated to Pulaski County and 1.5 percent dedicated to the city.
On Wednesday, the city received tax revenue from January sales, its finance staff said.
The new tax is divided into two parts, with five eighths dedicated to operations and deposited into the city’s general fund. The remaining three-eighths is dedicated to capital projects like drainage and street repairs.
The five-eighths portion raised $2,112,949, while the three-eighths raised $1,263,349, according to the financial report from the state. The five eighths percent was lumped into the overall general operations state turn-back money, which increased by more than 45 percent from the same month last year to just shy of $7 million.
Little Rock Finance Director Sara Lenehan said the five-eighths percent operating tax raised a small percentage more, about 0.81 percent, than had been projected by the state. The three-eighths percent capital tax performed slightly below projections.
Lenehan said she had not calculated the sales tax projections on a month-to-month basis because of different factors such as holidays and back-to-school shopping, and did not have exact monthly projections from the state finance department.
She said the slight difference in how the two portions of the tax performed was likely attributable to businesses that have not yet updated their equipment to charge their customers the increased amount.
“We are speculating that the difference is that there are some businesses that had not implemented the [ three eighths percent] tax, and they will get billed for that,” she said. “The operating tax was an increase to a tax that was already in place, so it would be easier to implement in some ways. We anticipate that we’ll see additional funds as those businesses catch up over the next month or two.”
The city won’t have to wait to start using the money, City Manager Bruce Moore said. The five-eighths percent operating fund revenue has already been placed in the city’s general fund and will be distributed to departments.
Moore said the city Board of Directors plans to consider a resolution to put the first proceeds from the three-eighths percent tax toward designated 2012 street and drainage projects.
Arkansas, Pages 9 on 03/30/2012