TEXARKANA -- During a hastily-called special meeting Monday morning, the Texarkana city Board of Directors approved a settlement in a lawsuit over a sales tax collected to ensure pay parity between the Police Department and its Texas-side counterpart.
The city will agree to use all revenues generated by the tax to pay for police salary maintenance and raises, as well as to pay the plaintiffs $50,000 in attorneys' fees and $1,000 in additional costs, Arkansas Municipal League attorney Sara Monaghan, representing the city, told the Board.
The Miller County circuit court will issue a decree in the case that reads, "Pursuant to a settlement agreement in this case, the court decrees that Ordinance K553 and K554 require that all revenues collected from the .25% sales and use tax which passed on Jan. 9, 1996, will be used to pay for salary increases for officers of the Texarkana Arkansas Police Department and to maintain salaries and salary increases for officers of the Texarkana Arkansas Police Department," Monaghan said.
Those ordinances established the parity sales tax for the Police Department. A similar pair of ordinances did the same for the Fire Department, which was not involved in the suit or settlement.
Attorneys for a group of city residents, who brought the suit in December 2017, and attorneys representing the city reached the agreement Monday night, after a seven-hour, court-ordered mediation.
Five Board members and Mayor Allen Brown voted to approve the settlement. Saying he had not been included in discussions of the agreement, Ward 2 Director Laney Harris abstained.
Monaghan said the standard Arkansas Municipal League settlement agreement includes language that dismisses all plaintiffs' claims with prejudice, waives any further claims and says the city does not admit any liability in the case.
The settlement seems to end decades of continual dispute over how the parity taxes' revenues have been used, pitting residents who claimed they were mismanaged against city officials who countered that they were insufficient to fully fund pay parity. A group of city residents filed the suit in an effort to force Police Department pay parity with a court ruling.
Over the course of court proceedings, the city argued that the parity taxes are against the state constitution because they effectively let another entity -- Texarkana, Texas -- set the the Arkansas side's pay policy. Pressing the lawsuit in court could have resulted in elimination of the taxes, leaving the city with a revenue shortfall of millions of dollars a year.
A statement from the Texarkana Police Association expressed approval of the deal.
"We now can move forward in 2021 with confidence and trust that the city will do the best they can to take care of us as we will do the very best we can to take care of every citizen of Texarkana, Arkansas. This long overdue chapter has been closed," it said.
In an open letter last week, the Texarkana Arkansas Police Association said it supported an agreement that would not put the parity tax in jeopardy.
Resolving the suit will allow the city to move forward in the best interests of city employees and residents, Brown said after the meeting.
"It's wonderful. I think first and foremost, our full intent has been to take care of our city employees and our Police Department employees... Being able to get this behind us, with the threat of the possibility of losing that tax, it being declared unconstitutional, is a huge win for the city," he said.
Referring to land recently purchased by the city Public Facilities Board as incentive for new industrial employers to locate here, Brown said his ultimate goal is to develop the local economy.
"We can move into 2021 and really get down to business to really increase the revenues of the city, work on things that will increase the revenue of the city and take care of not only our Police Department but our Fire Department and our other employees. And I'm real happy for that...
"I'm excited that this is over. I'm excited for 2021. We've accomplished some very good things. If this is not tops on the list, it's got to be up there first or second with the purchase of the industrial development property, which is a big thing for us," he said.
The settlement will not change a pay-raise plan approved by the Board in 2019.
According to the 2019 plan, any year the parity taxes generate enough revenue to fund competitive pay -- which is not defined -- and Texarkana's police and fire departments are not competitive with others within a 50-mile radius, competitive compensation will be paid.
Any year when the taxes are insufficient to fund competitive pay and the general fund reserve is less than 62 days of expenditures, police and firefighters will not get raises. If the tax is not enough but the reserve is more than 62 days, they will get raises to competitive pay or 2.5%, whichever is less.
An attorney for the suit's plaintiffs did not respond to a request for comment Tuesday.