For Little Rock coffers, online sales' threat dire, city director says

The Little Rock Board of Directors wants Arkansas' two senators and the city's congressional representative to meet with board members about how lack of Internet sales tax collection is negatively affecting revenue growth in municipalities.

City Director Dean Kumpuris has raised the issue repeatedly over the past several years.

While Little Rock initially planned for a 2 percent growth in sales tax revenue year over year when it passed a tax increase in 2011, it has yet to meet that projection. At the time, officials thought the projection was conservative.

By the end of 2016, the city will see about a 0.5 percent increase in sales tax revenue over the previous year, Finance Director Sara Lenehan said.

At a board meeting last week, Kumpuris noted the addition of malls and shopping outlets in Little Rock have not helped revenue growth. That tells him more people are shopping online and those online retailers aren't collecting the state and local sales taxes, he said.

"We are in a really bad crisis," Kumpuris said. "I don't know what we can do about it, but if we don't start making people in our Legislature understand, and our two senators and representative [in Congress] understand what they're doing to us, we're going to be laying off people, decreasing services and then people are going to start saying, 'You're not good fiduciaries of the money.'"

The National Conference of State Legislators recently released a report showing Arkansas lost more than $113 million in uncollected sales tax on Internet sales in 2012.

In his comments last week, Kumpuris chastised Sen. John Boozman, Sen. Tom Cotton and Rep. French Hill for not responding to a letter he thought the city had sent on the board's behalf in November inviting the three Republicans to discuss the issue with board members.

Kumpuris suggested inviting the delegation for a chat at a November meeting, and the board came to a consensus to do so.

But, it turns out, the letter was never sent. Kumpuris didn't know that when he spoke about the sales tax issue last week. He had harsh words for the three congressional members, saying it was "nuts" that they never responded.

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"I know I sound like a broken record, but it really upsets me we are not taking a more aggressive stance," Kumpuris said. "It really really upsets me that our two senators and our representative won't come stand and tell people right here in Pulaski County why they want to let us go broke."

He continued: "To allow people not to do something and not to do the right thing is crazy. I don't know how to get their attention. I don't know if [the mayor] should call them, if someone should say you've got this crazy, ranting idiot down here who is making a fool of himself, but I'll be glad to be that person.

"Somebody needs to get someone's attention to come talk to us. We represent 200,000 people and we are going to lose this city if we don't do something," he said.

His comments prompted officials to look into sending a second letter, only to find out they never sent the first.

City Attorney Tom Carpenter wrote in a memo that the board had voted on a motion to send the letter, and Carpenter circulated a resolution that served as a draft of the letter via email, but that the draft was never put on the agenda for a formal vote.

"However, at least some members of the board believed that the resolution had been voted upon [with the motion] and the resolution [that I circulated] was merely a recordation of what was desired," Carpenter wrote. "In any event, no copy of the resolution or letter to request the audience was ever sent to the Congressional delegation."

A new invitation to the congressional delegation will be voted on by the city board today at its 6 p.m. meeting.

It notes that "the modern digital age" has resulted in an increase in Internet sales, but that many online providers do not collect local sales taxes.

"It is important that our Congressional Delegation recognize the impact this development has had on the ability of local government to provide basic services, much less the federally imposed but unfunded mandates to meet the special needs of the citizens, and the other services that are necessary for a prosperous and vibrant community," the resolution states.

In response to Kumpuris' comments last week, Mayor Mark Stodola said the Arkansas Municipal League, other state leagues, the U.S. Conference of Mayors, the National League of Cities "and the big seven national organizations are all singing the same song out of the same hymnal and Congress is not moving on it."

He said what the city board must do now is figure out how it can independently act on the issue aside from what the state Legislature and Congress might do.

Kumpuris referred to Stodola's often repeated saying that Little Rock will be "the next great American city in the South" during his comments.

"I'm going to bring it up every week until we start doing something or until we just say we are going to let this city go. We're never going to be what Mark wants us to be -- the next great American city -- if we don't have any money to do it. It just doesn't work. Doesn't work. You don't have deteriorating roads, deteriorating services, you can't pay your employees, and then we're going to say we're going to be a great American city. It doesn't work," Kumpuris said.

A Section on 01/17/2017

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