LITTLE ROCK — Little Rock residents will have their say Sept. 13 on whether shoppers should pay 1 percentage point more in sales tax starting next year to offset the cost of Little Rock government and fund $195 million in construction and economic development projects over the next decade.
A majority of city directors Tuesday approved putting the tax increase on the ballot after rejecting two last-minute attempts to alter the tax package. They also passed a resolution detailing how tax revenue would be spent.
“It’s an investment in the future and making Little Rock a great city,” Mayor Mark Stodola said after the vote.
If passed, the tax increase would bump Little Rock’s current half-percent sales tax up to 1.5 percent. City officials say it would pay for the construction of two new fire stations, two substations and a new police headquarters and courts building and the salaries for additional police officers, firefighters, code-enforcement officers and parks department employees.
Voters will be asked to approve two separate measures, breaking the tax into operations and capital funding.
Five-eighths of a percentage point would cover day-to-day government operations, such as salaries, additional funding for the Pulaski County jail and increased parks maintenance. The operations tax is estimated to raise $31.6 million a year and would cover a one-time $4.25 million gap in next year’s budget.
An additional three-eighths of a percentage point would pay for capital expenses, such as new police stations, replacement vehicles and technology upgrades. The tax revenue would also replace Little Rock’s 27-year-old emergency communications system that a number of hospitals and police departments in Pulaski County use to communicate, and provide $32 million to expand the Little Rock Port and build a research park.
The capital-expenses portion of the tax would expire in 10 years, although the city could ask voters to reapprove it.
Little Rock shoppers now pay 7.5 percent in sales taxes when including the state’s 6 percent tax and Pulaski County’s 1 percent tax. Restaurant meals and hotel rooms are taxed an additional 2 percent by the city.
City Director Ken Richardson, who represents midtown and southwest Little Rock, voted against the tax referendum at the end of the nearly four hour meeting. He said the city lacked incentives to encourage companies benefiting from economic development funds to hire Little Rock residents.
“It needs to be connected to a vision ...,” he said. “A sales tax is not a panacea.”
Instead of voting the referral up or down, City Director Erma Hendrix voted “present.”
“Other than Annie Abrams and my daughter, I don’t think there was anyone else here,” she said, referring to Ward 1 residents. She added that her downtown ward wasn’t really represented by the dozen people who spoke for and against the tax Monday. “I represent the residents of Ward 1 and I speak for no one else.”
The two voted the same way on a separate resolution detailing how new tax revenue would be spent and on individual ordinances establishing the two tax rates.
The city’s spending plan changed slightly from what City Manager Bruce Moore presented to the public last week.
Moore said he restored nine new firefighter positions he had cut when reducing the tax proposal from a 1.25 percentage-point increase to a 1 percentage-point increase. To offset the restored salaries, Moore reduced his estimates of next year’s budget gap from $4.5 million to $4.25 million, and reduced pension funding from $4.6 million to $4.2 million.
Also, the resolution established that $3 million in sales tax revenue earmarked to entice the State Fair to stay put would be spent on parks improvements if the fair leaves its Roosevelt Road location.
What voters see Sept. 13 could have been drastically different if two proposed amendments suggested Monday had passed.
Richardson couldn’t get any support for his motion to reduce the 10-year sunset on the capital tax to four years.
City directors also voted down City Director B.J. Wyrick’s proposal to separate the $38 million economic development portion into a separate vote.
Had her amendment passed, residents would have had three questions on the ballot to decide. Since it failed, they only have two — the five-eighths-percentage point operating tax and the three-eighths-percentage point capital tax.
Wyrick said she wasn’t hearing much support from the community for the economic development package that includes $22 million for a new research park, $10 million for the Little Rock Port and $6 million for infrastructure improvements for businesses that create jobs. Separating the economic development spending would help the other measures pass, she said.
“We’ve got one shot to try and fix things in this city. I didn’t want it to kill the things we need for police and fire,” Wyrick said.
Two outside tax attorneys that were consulted apparently told city officials they had legal concerns over subdividing the ballot questions even though City Attorney Tom Carpenter said he didn’t share their concerns.
If voters had turned down the economic development package, there was no backup plan for spending the $38 million, City Director Brad Cazort said in explaining his objections to the bifurcation.
“If you put too much on this ballot, it’s going to get lost,” said City Director Doris Wright. “I don’t want us to confuse the voters.”
PUBLIC’S RESPONSE
Residents who spoke for more than an hour on the proposed sales tax were split.
One resident said funding for parks had been cut too much, and others said the proposed tax increase would burden the city’s working poor. The comments, however, focused mostly on the city’s intention to spend $22 million on establishing the Central Arkansas Technology Park.
City directors last year approved joining the park authority, which is a partnership between the city, the University of Arkansas for Medical Sciences and the University of Arkansas at Little Rock. Little Rock’s Chamber of Commerce also has a representative on the seven-member authority board.
The recently appointed board hasn’t met yet, nor has a site south of Interstate 630 been picked.
Residents living west of Woodrow Street near Interstate 630 said they had a hard time stomaching a tax increase that could be used against them. The research park authority has the power to use eminent domain to acquire land.
“It’s going to be there, and there’s nothing we can do about it,” said Maudella Morehead-Parham. “We’d like for every one of you all to be fair with us and give us relocation value.”
A study suggested looking south of Interstate 630, within five minutes of the universities, although Stodola said Monday that the authority wasn’t looking east of the Cedar and Pine Street exit. Residents asked him to sign a letter that said the city’s representatives would be “sensitive to all elements offered by a landowner as the justification for a decided fair market value.”
Stodola did so and said he expects the other agencies involved will do the same.
University officials, Port Authority and chamber representatives all spoke in favor of the tax increase and economic development support.
“Research parks are not for universities. Research parks are for the community and they’re for taking advantage of the university being there,” said Joel Anderson, UALR’s chancellor who tried to make the case that the city would benefit short-term and long-term from the park.
“A research park is just a marvelous bet for a community that wants to benefit over the long run,” he said.
Front Section, Pages 1 on 07/12/2011