PEA RIDGE -- After a lengthy discussion about a proposed one-cent city sales tax during the City Council meeting, with explanations by Ryan Bowman, bond attorney with Friday, Eldridge and Clark, and Kevin Faught, senior vice president of Stephens Public Finance, council members were at an impasse and agreed to meet in a special Committee of the Whole to continue the discussion.
On Monday, Mayor Jackie Crabtree set the meeting for Wednesday.
Three ordinances had been prepared for consideration by council members. One called for levy of a 1% sales and use tax; one called for a special election for the 1% sales and use tax; and one called for a special election for issuing bonds.
Bowman, who had met via Zoom with city officials, explained the bond and ballot questions. He said the bond issue was to provide funds for street repair and maintenance and would be guaranteed by funds from the sales tax revenue.
"The levy of the tax is not dependent on any bonds being approved or issued," Bowman explained.
The bond would provide $5.8 million to the Street Department, Bowman said.
Council member Merrill White, who said he missed one of the Committee of the Whole meetings, asked: "Are we too late in the game to reallocate the percentages?"
The ordinances presented provided for the sales tax revenue to be divided in thirds between the Fire, Police and Street Departments with a dedicated amount to bond repayment.
White, citing the 1984 sales tax issue that dedicated percentages to various city departments, said he had received questions from city residents about whether parks and recreation would receive any of the money.
"When I think about that, two years from now, if we have that money locked up... it's hard to go back," he said.
City Clerk Sandy Button said the council must pass all budgets and if the tax were to pass as it's written, there would be money "freed up" from other sources that could be used for parks and recreation or any other department.
Council member Ginger Larsen asked: "Do you know off the top of your head what amount will it free up?"
"All the money the [Police Department] has coming out of City General," Button said. "They don't have a revenue source."
Police Chief Lynn Hahn said his budget is $1.6 million.
"Are you estimating it would be the $1.6 that wouldn't come out of city general any more?" Larsen asked.
"They would automatically get 45% of what would be left over, then, when they get their budget, you guys decide," Button said, explaining that if the tax were passed as the ordinance is written, the Police Department would receive 45% of the revenue available after the bond payment is paid.
"The parks having a slice would be great," Larsen said. "We're talking about whether we allocate the funds. If we do allocate them, and it frees up... we need to understand what kind of money we're looking at."
"What makes it the simplest, every year, every department brings you a budget," Button said. She said the amount dedicated by the 1984 ordinance is "automatics, but we have to supplement every department with city money.
"This board decides where all the money will go; at the end of the day, neither of those amounts will fully fund those departments," she said.
Council member Steve Guthrie said he believed to ask the voters for a sales tax without dedicating the revenue would make it harder to pass.
"There are arguments for and against," dedicating the revenues, Bowman said, explaining that he had written the ordinance as directed by city officials.
Council member Cody Keene said when he voted in April to consider the ordinance at the May meeting, his intention was to push the question forward to allow the community to speak, not to vote on the ordinance at the May meeting. "I want to see what the community wants."
Keene said he had not been contacted by any voters on the issue.
"Ultimately," Bowman said, "the voters want you guys to decide ... then you put it out to a vote and that's where they speak. Typically they won't give you feedback until they go to the ballot box."
Larsen said she has received a great deal of feedback and said the people contacting her want to see the funds allocated.
"I worry that if we don't allocate the funds, the citizens won't pass it... It puts me more at ease hearing what Sandy said, that it frees money... we can allocate... we're doing our part here. It's important to support the Street Department. They need the bond money; there's no way they can do repairs and work without that," Larsen said.
"I agree with what everybody is saying. At some point in future, if we want to do bond issue for parks, like a 1/8th, there are options there," said Crabtree.
Button pointed out there can be issues approved that have a sunset clause providing a greater opportunity for acceptance by the voters.
Both Bowman and Faught pointed out to have the election in August, the ordinance must be approved and filed with the clerk 60 days prior to the election. Bowman said if the election is held in August or September, money would begin being received by the city Jan. 1, 2022. He said if it's later than that, money would be received in April.
"We want to 'do it right,'" Crabtree said.
City attorney Shane Perry pointed out interest rates are expected to change dramatically and reminded the board money was saved by refinancing bonds for the Water Department recently.
"Everything I read and the people I talk with ... all have some discomfort about interest rates going up," he said. "Our dollar won't buy as much. I would encourage you to set a committee of the whole to address this. I would ask the city to be aggressive in getting on the same page for us to move forward as quickly as possible. Time is of the essence because of the market conditions we're facing."