North Little Rock's mayor touts tax plan to community

Smith pitching sales tax rise at meetings with 30 groups

Mayor Joe Smith isn't wasting time getting in front of community and business groups before North Little Rock voters are asked to approve a 1 percentage point increase in the city's sales and use tax.

Smith had already spoken to five groups by midday Thursday, with another to come that evening. Those were the first of 30 scheduled engagements to pitch the need to raise the city's sales tax to 2 percent.

"Twenty-five to go," Smith said Thursday afternoon. "Some [meetings] will end up being combined. I hope we have standing room only wherever we go."

The North Little Rock City Council is expected to decide at its 6 p.m. meeting today to approve calling an Aug. 8 special election for voters to consider the 1 percentage point tax increase that is to be divided for different purposes: Half is to be a permanent tax for the city's general operations; the other half, to expire after five years, would be for capital improvements, repairs or construction to streets, fire stations, and the police and courts building.

The tax increase, if approved by voters, would be collected starting Jan. 1.

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Consumers are charged an 8.5 percent overall sales tax in North Little Rock. The amount includes the city's 1 percent tax, a 6.5 percent state sales tax and a 1 percent Pulaski County tax. North Little Rock voters approved the existing city sales tax in a special election in March 2000.

The increase in the city tax is projected by officials to raise $16 million per year, or $8 million each for the general operations portion and the capital improvements.

Without the added revenue for operations -- meaning city services and personnel -- there are projected shortfalls in the city budget through 2022, and the city's reserves are expected to drop from $13.1 million at the start of this year to $4 million within just two years, city officials have said. The city's numbers are based on projected 1 percent revenue growth and a 2 percent rise in expenses annually.

If the tax is approved, having the added half percent for general operations is predicted to create a reserve of $20.4 million in five years and have revenue outpacing expenditures in each of the next five years. The half percent for capital needs would allow improvements to very old city buildings, if not new construction, and needed repairs to streets and drainage systems, officials have said.

"I'm very confident that once the citizens see the numbers, they'll be in complete support of the penny," Smith said.

The mayor's scheduled meetings with community and business groups are meant to explain the city's reasons for seeking the tax to as many voters as possible, city spokesman Nathan Hamilton said.

"We're just trying to get the best information out there," Hamilton said. "We wanted a way to best explain to people what is happening with the city.

"If it doesn't pass, though, we're looking at some pretty big cuts to get a balanced budget for next year," Hamilton said. "Obviously, there would have to be some cuts, but it's much bigger than that. It's all the things we can do with it [the added revenue]."

The sales tax would have come shortly after the City Council was to implement a 1 percentage point increase in the city's lodging tax, but Smith unexpectedly withdrew that legislation at the latest council meeting two weeks ago.

Smith had proposed the lodging tax increase -- from 3 percent to 4 percent -- in April to the city's Advertising and Promotion Commission, which approved it. The City Council has final authority to raise that tax without calling an election.

"It was too confusing," Smith said of having two tax issues so close together. "I thought it was best to pull it down so we can turn our undivided attention to the [sales tax]."

Metro on 05/22/2017

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