Northwest Arkansas governments look to tax hikes to meet growing needs

FAYETTEVILLE -- Proposals to raise taxes on Benton and Washington county residents in the next year or two are piling up these days.

The Fayetteville City Council is set this week to discuss for the second time a 1-mill increase in property tax to pay for more police officers, firefighters and a few other positions. The city's library is mulling the details of when to ask taxpayers for a millage increase and how much it would be.

Proposed Increases

GovernmentTax TypeAmountReasonPublic Vote Required?

Benton CountySales or propertyTo be determinedA new circuit courthouse that could cost around $30 millionLikely yes; Quorum Court has said it plans to send either kind to voters

FayettevilleProperty1 mill (from 3.1 to 4.1)About two dozen positions in public safety and elsewhereNo

Fayetteville Public LibraryPropertyTo be determinedGrowing demand and possible expansionYes

Washington CountySales or propertyNot specifiedCrowded jail, dwindling reserve and other concernsYes for sales tax, no for property

West ForkSales1.5 percentSupport city services, infrastructure and maintenanceYes

Source: Staff report

The two counties have discussed options of a sales or property tax to cover a new courthouse in Benton County and to help cover growing jail costs and other expenses in Washington County. At least one small town, West Fork, is considering a higher sales tax for bigger and better projects and services.

With local governments considering needs and budgets for the coming year, bringing up all these potential requests at the same time isn't surprising, said Mark Hayes, the Arkansas Municipal League's legal services director.

"We're into the budgeting season, and so it's time to take stock," he said Friday. "There's infrastructure needs, there's public safety needs, there are road needs, water -- the list goes on and on, and population increases certainly tax all of those things."

Rising population and demand on public services are the common themes behind the increases.

Fayetteville library officials have said for months the facility can't provide the books, programs and other services patrons expect without more money coming in. Voters more than a decade ago approved a 1-mill levy for the library that produces more than $1 million annually, and voters would have to approve anything more.

Benton County's Quorum Court plans to send either a sales or property tax increase to voters for a courthouse to meet the rising tide of residents going through the circuit court system. A new building could cost millions, but details on the building and the vote are up in the air while the county seeks outside advice on the project.

Fayetteville Fire Chief David Dayringer said last month, "Our population has increased drastically over the last five years, so that means our call volume has increased 30 percent since 2010."

The Fayetteville plan would bump the property levy from 3.1 mills to 4.1 mills, increasing the tax bill for the owner of a $150,000 home from $93 a year to $123. It would support about two dozen new or unfilled positions, including a firefighting company and a police beat. Both the fire and police chief said they haven't added positions since before the recession.

Property and sales taxes are proportional, which means the number of dollars they haul in generally grows along with the population.

"I realize it's population growth and governments have to serve more people, but in theory you should live off those additional people," said Eva Madison, a Fayetteville Democrat on the Washington County Quorum Court who opposes raising taxes.

The Washington County judge and a handful of Quorum Court members in the past year or two have floated the idea of raising taxes, perhaps undoing a 0.5-mill cut in 2011 or boosting the sales tax dedicated to the continually overcrowded jail. Most of the justices of the peace have said they're against taking that tact.

"I think everybody needs to make a better effort to live within their means," Madison said about the cluster of tax-hike proposals. "Government can't just keep growing and growing and growing and get more expensive."

In Fayetteville's case, property revenue's natural growth isn't enough to cover growing needs, said Paul Becker, the city's chief financial officer.

"It does grow, that's true, but it's a very small portion of the general fund budget," he said, or about 3 percent out of $38 million. "Those property taxes can't go up a large enough proportion to cover those increases."

The batch of possible tax hikes could also signal a rebound of sorts from the recession, said Mike Malone, president of the Northwest Arkansas Council. The nonprofit group works with businesses and public officials to encourage development and quality of life.

Much as Fayetteville's fire and police forces have stayed flat for the past several years, governments from the federal level to the local have tightened or at least tempered spending. As a result, local governments have had to handle more of their own needs or put expenses on hold, at least temporarily, Malone said.

"You can only stretch that so far," he said.

NW News on 10/04/2015

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