Support drives council to seek 1% NLR sales tax

A 1 percent city sales tax is in the works for North Little Rock voters to consider in August, according to an informal agreement by city aldermen Monday night.

The decision made after a public hearing at Monday's City Council meeting was to direct City Attorney Jason Carter to submit a proposed ballot title by next Monday for approval by the state Department of Finance and Administration. If approved, the City Council would consider legislation next month to call for an Aug. 8 special election.

The ballot would ask voters to approve a 1 percent tax with the proceeds divided into two uses. One-half percent would be a permanent tax to use for general city operations. The other half-percent would sunset in five years and fund capital improvements for three projects: a new police and courts building, street improvements and fire station improvements.

By restricting the purpose for the capital improvements portion of the tax, Carter said, that tax revenue "could only be spent for those projects and not any other."

By listing specific projects in the ballot title, the majority of the council and Mayor Joe Smith said they believed the tax would be an easier sell to voters.

"I'm afraid if we don't tell them what we're going to do, it won't win approval," Smith said.

Alderman Beth White agreed, saying that the one message she had heard from constituents was that "they want to know exactly what we're going to spend it on. We have to be precise."

North Little Rock currently collects 8.5 percent in sales taxes, including a 6.5 percent state tax, a 1 percent Pulaski County tax and a 1 percent city sales tax voters approved in 2000.

The capital improvements tax would provide about $40 million over those five years, Smith said, to complete the projects to be listed in the ballot title. After five years, a new election could ask voters to extend the tax for another five years for new projects.

The council had primarily talked two weeks ago about the half-percent tax for city operations. After Smith met with leaders of 20 different civic and neighborhood groups Thursday and then those in attendance for Monday's public hearing, adding another half-percent for capital needs drew the most support.

The other main alternative, implementing a monthly sanitation fee, didn't draw favor from aldermen or the public.

Sticking with just a one-half percent tax, Alderman Debi Ross said, would mean the city would "lose a huge opportunity" to address capital needs, especially conditions of many city streets.

A half-percent sales tax would raise an extra $8 million annually for city operations, according to city projections.

Smith has shown projections that North Little Rock's revenue is falling behind city expenses for general operations. While city expenses have grown by an average of 3.5 percent annually in the past 10 years, city figures show, North Little Rock's share of county and city sales taxes has increased by a 0.3 percent yearly average.

The city's cash reserve, or the city's "savings account," as Smith referred to it in Thursday's meeting, is forecast to drop from $13.1 million to start this year to $8.9 million by year's end, then to a minus $1.5 million within three years, if no additional revenue is available.

Other taxes collected within North Little Rock, in addition to the 8.5 percent sales tax, are a 3 percent restaurant tax, a 3 percent hotel tax (with a 2 percent state tourism tax also charged for room rentals) and a mixed-drink tax of 24 percent total from state and city charges.

Rich Cosgrove of Whole Hog Cafe barbecue restaurant asked aldermen at the public hearing to consider that any new sales tax would add to the cost to their customers who already are charged the 3 percent "hamburger tax."

"When you add [a new tax], North Little Rock rises to the very top of this list," Cosgrove said, referring to a chart projected on a screen that showed North Little Rock's city sales tax rate among the bottom six of the state' largest 25 cities. "I'm not speaking against a sales tax, but I'm not speaking for it either. It raises the tax exponentially against any other city's sales tax."

Smith countered that most of the restaurant tax revenue funds the city's Parks and Recreation Department, which "brings a lot of people into the city to eat at our restaurants." Smith added that visitors to the city contribute 40 percent of the city's sales tax revenue, according to estimates.

Metro on 04/25/2017

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