FORT SMITH -- The Arkansas Municipal League is backing legislation that it says will protect cities and counties against potential financial problems under Issue 3, a ballot item in Tuesday's general election.
"This is probably the most important bill we've got," Arkansas Municipal League President Don Zimmerman told a gathering of officials Tuesday. "It's probably the least important we would have if Issue 3 doesn't pass."
Zimmerman, speaking at the fifth of 15 regional meetings to discuss municipal league services and the league's 2017 legislative slate, said Issue 3 would broaden the use of public money for private purposes. That broader use could cause counties and cities to go bankrupt, he said, if the economic development projects they would fund fall through.
"It's very important if we do get that amendment passed that it be implemented correctly," he said.
The Issue 3 ballot title proposes to alter Amendment 82 to the state's constitution to remove limitations on the principal amount of general obligation bonds that could be issued to attract large economic development projects.
It would authorize cities, counties and towns to obtain and appropriate money for any corporation, association, institution or individual to finance economic development projects and provide economic development services.
It also would allow cities and counties to issue bonds under Amendment 62 for economic development projects and use tax money to repay them.
The municipal league's proposed bill, which Zimmerman said was negotiated with the Arkansas State Chamber of Commerce and the bond community, would allow cities and counties to recapture the public's money in court if development projects fall through.
Recipients of the bond money would have to submit progress reports, Zimmerman said, and the bill would cap at 5 percent of their budgets the amount of money counties or cities could commit to projects.
Economic development projects in the proposed bill were defined, in part, as land, buildings, equipment, infrastructure and improvements for development, retention or expansion for such things as manufacturing, industrial facilities, research and technology facilities, recycling facilities, distribution centers, call centers, warehouses, or regional or national corporate headquarters.
The municipal league's legislative package included a proposed bill to alter Amendment 31 to increase from one mill to two a city's property tax limit for fire and police pensions.
The legislation would refer the proposed amendment to voters in 2018, Zimmerman said. If the amendment passes, cities would have the option to put the millage-rate increase to a local vote.
Many cities around the state, including Fort Smith, are having trouble finding the money to keep up payments to the Arkansas Local Police and Fire Retirement System.
"It's a big problem in the state now, and this is not an immediate solution to that problem but it might be a long-term solution," Zimmerman said.
Fort Smith Director Tracy Pennartz said she thought the problem was not the amount of money the city was required to contribute to the fund, but the amount of benefits paid out to retirees under state law.
For example, she said that if a widow receiving the retirement benefits of her husband remarries, she will continue to receive her late husband's benefits.
Another of the 20 proposed bills in the municipal league's legislative package is one that, if passed, would allow a municipality to bypass the petition process and put an alcohol-sales issue to voters by ordinance.
Now, cities and counties have to go through a petition process to gather the signatures of 38 percent of registered voters to get an alcohol sales issue on the ballot.
Several counties tried this year but failed for reasons including improper registration of canvassers, inability to gather enough signatures, and petitions signed by persons not registered to vote in the county.
State Desk on 11/02/2016