Expiration added to Little Rock tax proposal

1-point increase would end in 10 years

Little Rock Mayor Frank Scott Jr. holds a news conference on Wednesday, March 31, 2021, to discuss details of his Rebuild the Rock sales tax proposal. More photos at arkansasonline.com/41mayor/. (Arkansas Democrat-Gazette/Staton Breidenthal)
Little Rock Mayor Frank Scott Jr. holds a news conference on Wednesday, March 31, 2021, to discuss details of his Rebuild the Rock sales tax proposal. More photos at arkansasonline.com/41mayor/. (Arkansas Democrat-Gazette/Staton Breidenthal)

A 10-year sunset date has been added to Little Rock Mayor Frank Scott Jr.'s proposed "Rebuild the Rock" sales-tax increase of 1 percentage point, according to city meeting materials released Friday.

Under Scott's original proposal, the tax increase would have been permanent.

Members of the city Board of Directors will have the opportunity to vote to call a Sept. 14 special election on the tax increase during a meeting Tuesday at Southwest High School.

Three items comprising the tax increase -- including an ordinance to call the election that stipulates the tax increase will cease Dec. 31, 2031, after 10 years -- were added to the board's agenda as part of the meeting materials uploaded to the city's website Friday.

During a board meeting Tuesday, Ward 3 City Director Kathy Webb had requested that the sales-tax items be added to the agenda for the next meeting.

Webb made a motion last month to table Scott's sales-tax package until July 13, and the board approved the motion in an 8-2 vote. The decision effectively closed the door on the possibility city directors would approve a July 13 special election as Scott had requested.

In a phone interview Friday, Webb said she plans to vote yes on the measure to call a special election, citing adjustments to the tax package and more robust discussion of federal dollars from the most recent federal stimulus legislation.

[DOCUMENT: Click here to read the resolution on the uses for a proposed Little Rock sales tax » arkansasonline.com/612lrtax/]

"My intention from the beginning, as I said, was to get to 'yes,' but I think I have a responsibility to listen to my constituents who have typically been among the most supportive residents of Little Rock when it comes to issues like this," Webb said. "And they had a lot of concerns, so I think it was my job to do due diligence and address those concerns."

Her announcement means the tax package is one vote closer to securing approval at the city board, which has been divided over the proposal. The city board must call an election before the measure can be referred to voters in an up-or-down referendum.

In a tweet Friday looking ahead to the meeting, Scott wrote, "The revised #RebuildTheRock proposal will be presented [and] we're hopeful the members will pass this initiative to unite, grow & transform our city!"

Senior mayoral adviser Kendra Pruitt could not be reached for comment immediately by phone or email Friday.

A new version of a resolution stating the planned uses of the new tax revenue now includes specific projects or initiatives under each category. For some categories, spending is further divided into planned operating and capital expenses.

Scott's proposal would use an estimated $53 million in new annual revenue from the tax to fund improvements to parks, bolster community-oriented policing, add exhibits to the Little Rock Zoo and create more high-quality early-childhood education offerings.

Under the proposal, an estimated $37 million over 10 years would fund construction of an indoor sports complex, and an estimated $30 million in capital funding would go toward Hindman and War Memorial parks.

When the tax proposal was rolled out earlier this year, around the same time, city officials said an existing three-eighths percent (0.375%) sales tax used for capital improvements would be allowed to expire at the end of December after 10 years.

If voters approve Scott's tax increase later this year, because of the expiring tax, the overall sales-tax rate in Little Rock would increase by five-eighths of a percentage point (0.625%) to 9.625% when accounting for state and county sales taxes. The increase would take effect in January.

In the event of a narrowly divided board Tuesday, the mayor will need at least five yes votes among the 10 city directors in order to exercise his power to cast a tiebreaking vote. Ordinarily, the mayor does not get to vote on measures before the board.

In addition to Webb, a board member who could turn out to be a decisive voice on the revised tax package is Ward 4's Capi Peck. She did not return an email Friday.

Webb said she had met with the mayor several times and raised specific concerns. She added that he had met with others.

"I don't know what all the outcomes were, of course, but I also know that people will be traveling some this summer, so it seemed like the appropriate time to bring it back," she said of the tax package.

During the meeting in May when the board voted to table the package, Webb had raised concerns about forthcoming direct aid to the city from the federal American Rescue Plan Act, which Congress passed and President Joe Biden signed in March. The city expects to receive $37.7 million total, and half of the money was received last month.

Additionally, at the time, Webb said constituents had asked for more discussion of a possible sunset date or a continuation of the existing three-eighths percent sales tax.

Webb said Friday that she felt the dialogue about the federal dollars had "opened up," and referred to a recent presentation to the board on the money led by the city's director of strategic operations, Emily Jordan Cox.

"Is it perfect? No. Do I know what the people will decide? No. Is the timing right? I don't know. But I will vote to send it out and then ... the people will tell us what they want to do," she said.

With regard to the sunset date, Webb said that although she had not seen the written document, she expected a sunset date to be part of the proposal. She said she hoped that another request from residents for more specificity on how the money will be spent would be included in the tax resolution.

Her comments were made before the release of the written materials on the city's website Friday.

Scott first proposed a sales-tax increase during his 2020 State of the City address, but the effort was abandoned because of the coronavirus pandemic. He revived his push for a sales-tax increase during his virtual State of the City broadcast on March 25.

The decision to add a sunset date represents a retreat for Scott, but it may win over additional votes on the board and in the community for residents reluctant to approve an open-ended tax increase.

In late April, John Burgess, chairman of the Little Rock Regional Chamber of Commerce, told Scott in an email that the absence of a sunset date for the capital-expenditure portion of the tax was "the biggest single issue with the proposal raised by our leadership group and it's the single biggest issue that gets mentioned by those in our social networks."

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