Little Rock’s revenue from the citywide sales-tax increase is growing at a slower rate than city officials predicted when lobbying to pass the tax in September 2011.
City employees from each department gave updates to the Little Rock Citizen Evaluation of the New Tax panel on Wednesday on how projects funded by the tax are progressing and what’s on the agenda for the near future.
Based on previous sales tax collections, the city had projected a 2 percent annual growth in collections over the next 10 years. But returns for the first three months of 2013 show the growth rate is about 0.22 percent over last year’s revenue during the same period.
“Year to year, it’s about a $25,000 growth, which is not hitting that 2 percent growth rate we had predicted and hoped for,” Little Rock Finance Director Sara Lenehan said. “The numbers are still up and down from month to month, even.”
According to Lenehan’s presentation, the city has collected $11,248,372 for the first three months of 2013, compared with $11,223,537 for the same three months in 2012. The city collected a total of $46,442,324 for all of 2012.
The voter referendum divided the 1 percentage-point tax increase into two parts - five-eighths percent for operating funds and three-eighths percent for capital-improvement projects. The capital portion of the tax will expire in 2021.
When the city campaigned to pass the tax, staff members used a 2 percent growth rate to estimate how much money would be available for the capital projects portion of the tax. City officials calculated a figure of $196 million and included a list of specific projects and funding levels for those projects.
City Manager Bruce Moore said Wednesday that the 2 percent growth rate was a conservative estimate based on forecasts for inflation and strength of the economy.
“Our thought on that was the tax was more likely to experience a 3 or 4 percent growth rate,” he said. “But if we used the lower rate and we experienced some lean years in the beginning as we continued to exit the recession, then if there were better years in the middle where we experienced 4 percent or higher growth rates, then it would even out in the long run.”
Moore said with only a year and a few months worth of revenue in the city’s coffers, there was no need to worry about future funding for any of the scheduled projects - including $22 million to help build the proposed Little Rock Technology Park and about $72 million for road, trail and drainage work.
“It’s too early in the returns. We’re not at the point where that would be necessary,” he said. “We have faith that the growth rates will improve and that the conservative projections will come to fruition or maybe return even more revenue than we estimated.”
Lenehan said the numbers can be a little confusing for residents who read or hear that the state is experiencing more growth in its sales-tax revenue. She explained that on several kinds of purchases - including new cars - the state can collect tax on the retail value, while cities are capped at collecting on the first $2,500 of such a sale.
Whether someone buys a new SUV or a used car worth more than $2,500, the city will always collect the same amount of tax on that purchase - $32.50. She said that figure alone explains why the state’s sales-tax revenue is growing at a much faster rate than the city’s.
City departments gave brief updates on projects and plans for the near future. Some of the highlights included:
Negotiations are taking place to acquire property on Stagecoach Road to construct a southwest Little Rock fire station.
Three potential sites for a west Little Rock police substation have been identified, and Police Chief Stuart Thomas said a final site should be selected in the next two months.
Almost 19 miles of asphalt resurfacing have been completed, and 1.25 miles of sidewalks have been built.
Work has progressed on the tiger, otter, bird, great ape and amphitheater attractions at the Little Rock Zoo.
More than 50 police officers have trained, and a class of 30 to 40 new recruits will start training in July.
Dozens of employees have been hired, including an elephant keeper, several code enforcement officers and an animal-services officer.
Dozens of new and replacement vehicles have been purchased for almost every department.
More than $5 million has been allocated to after-school and at-risk youth programs, as well as re-entry programs to help newly released prisoners.
Arkansas, Pages 9 on 06/20/2013