Tuesday's successful sales-tax special election will help secure North Little Rock's financial future, Mayor Joe Smith said, instead of creating a more flexible city budget for 2018.
Voters approved Smith's plea for a 1 percentage-point increase in the city sales tax, raising the total sales tax consumers will pay in the city to 9.5 percent, starting Jan. 1. The total includes a 6.5 percent state tax, a 1 percent Pulaski County tax and North Little Rock's current 1 percent city tax.
With all 27 precincts reporting, unofficial results were:
For 2,786
Against 1,925
Passage of the tax means a projected $16 million or more in additional yearly revenue for the city. One-half percentage point of the new tax will last only five years and will fund a new police and courts building, fire station upgrades and street and drainage improvements. The other one-half percentage point will be permanent and used for general operations.
As the city is moving into its budget process for 2018, knowing extra money will be coming in won't alter the budget thinking, Smith said.
"What it does is it secures our future," Smith said Wednesday morning. "I'm talking five years down the road, eight years down the road. We're not going to change anything. We're going to have a tight budget, no matter what.
"Our budget process will be 'how can we save money and how we can continue to give the good service we provide,'" he said.
One goal of the new tax money is to allow the city to increase its reserve fund, also referred to as its fund balance or emergency fund. The fund has commonly been used as a safety net for balancing the city's general fund, including taking $4.2 million from it to balance this year's budget.
The reserve fund is down to just under $9 million, according to city figures.
"I'd like to get that reserve up pretty high," Smith said. "I don't know what 'high' is, but I certainly don't want it to go any lower than what it will end up at this year. It's just a good feeling for a mayor and a City Council to know you've got that money in the bank if something happened."
City Finance Director Karen Scott said Wednesday that voters' support of the tax increase will allow the city to "add to the fund balance every year instead of subtracting" from it to balance the budget. Scott had said during the campaign that passage of the tax increase wouldn't mean the city going on "a spending spree."
"I think the department heads are still going to make their requests efficiently," she said about next year's budget. "I will still budget revenue as conservatively as I have in the past."
Kenny Wallis, who led an effort opposing the special election, said the city doesn't efficiently use its revenue because of what he referred to as "pet projects."
"The way it's spent on the tugboat and the submarine and the trolley and the plaza, those are not economic engines," Wallis said.
The proposed plaza, to be a "gathering place" in Argenta downtown, is to mainly be paid for by a fund using money from city property sales, Smith has said. North Little Rock's share of the Rock Region Metro Streetcar's annual cost is $339,180 in a partnership with Little Rock and Pulaski County.
As part of the Arkansas Inland Maritime Museum, the Hoga, a tugboat that survived the 1941 attack on Pearl Harbor, and the World War II submarine Razorback are under the city Parks and Recreation Department. The Parks Department's budget is funded by the city's 3 percent tax on restaurant meals, separate from the general fund, though the city did transfer $50,000 to the museum from the general fund this year after providing $150,000 last year.
The one-half percentage point of the tax increase that is set for capital improvements is projected to bring in $40 million in revenue over the five years the tax is in place. Of that, $20 million will be used to replace the 57-year-old police and courts building at 200 Pershing Blvd., $10 million for fire station improvements and $10 million for street and drainage work, according to city estimates.
Smith has received two possible sites to move the police and courts but wants a third choice as well, he said. Because the current building backs up to North Little Rock High School, Smith said, the North Little Rock School District will have the opportunity to take over the property.
"The new building is a huge part of it for us," Police Chief Mike Davis said. "Now we can have everybody together. It will make us more efficient. Right now, you might have to go to three buildings to get what you need."
Despite Smith holding 44 meetings over the past two months and maintaining an active social media presence to promote the tax election, only 12 percent of registered voters in the city turned out.
The 4,711 votes were fewer than in city special tax elections in 2000 (7,192), 2005 (7,800) and 2011 (5,293). Whether that meant huge confidence that the tax would pass or general apathy is hard to figure, Smith said.
"I don't know if I could ever put a finger on exactly what's the right way and what's the wrong way" to motivate voters, Smith said. "I really wanted more people to vote. A lot of people think that's why you have a special election [for a low turnout]. In this situation, the aginners are always motivated to go vote.
"Having more people who voted would have been better for us, but we were able to win with a lower turnout."
Metro on 08/10/2017