NLR aldermen put tax issue on ballot

Chronic deficits, capital projects cited

North Little Rock aldermen on Monday set a special election for Aug. 8 to ask city voters to approve a 1 percentage point increase in the city’s sales and use tax, raising that tax to 2 percent.

The City Council twice voted 7-0 on separate ordinances to provide for the levying of the tax once approved by voters and to call the special election. Alderman Murry Witcher was absent.

“I’ve already started on the campaign trail,” Mayor Joe Smith told the council. His emphasis, he added, has been to explain “what we need and what we’re going to spend it on.”

Smith said last week that he had already spoken to six business and civic groups among 30 such meetings scheduled. He announced at the council meeting that Craig Douglass Communications Inc., a Little Rock marketing firm, would manage the tax campaign.

The ballot will include only one issue, the sales tax, but the tax revenue would serve two different purposes. One-half percent would be a permanent tax for the city’s general operations. The other half would expire after five years and be used

for repairs or construction for streets, the police and courts building, and fire stations.

The tax increase is projected to raise $16 million per year, according to city calculations. The new tax revenue would be divided evenly between the general-obligations portion and the capital improvement projects.

The tax increase, if approved, would start being collected Jan. 1.

Kenny Wallis, who has run opposition campaigns on previous area tax issues, spoke against the tax at the meeting, questioning the need to schedule a special election instead of adding the tax question onto a general election ballot. Wallis also objected to the city previously awarding city employees raises while now stating that the city is short on funds.

The City Council dipped into its reserve fund each of the past two years to balance its general fund budget. The city used $2.37 million of the $3.69 million diverted from reserves in those two years to give employee raises.

“If you need the money you claim, you shouldn’t be giving raises,” Wallis said. “Special elections depend on minimizing turnout. I plan to oppose this tax increase and urge people to vote against it.”

Delaying the tax election would delay the start of collecting the tax revenue, costing the city millions of dollars, aldermen told Wallis.

Smith asked aldermen to help get the city’s message out, adding that they will be provided with a two-page “executive summary” to explain what is needed.

“There’s no reason for me to be the only one going out there,” Smith said. “I really need your help.

“If I can get out in front of enough people, I think I can convince most people who are reasonable to vote for this,” he said.

Consumers are charged an 8.5 percent sales tax in North Little Rock. That amount comprises a 6.5 percent state sales tax, a 1 percent Pulaski County tax and North Little Rock’s current 1 percent sales tax. North Little Rock voters approved the 1 percent sales tax in a March 2000 special election.

Without the added revenue for operations — basically city services and personnel — the city projects budget shortfalls through 2022, according to information previously provided to the council. City reserves are projected to drop from $13.1 million to start this year to $4 million within two years. If the tax were approved, revenue from the permanent tax would outpace expenditures in each of the next five years, according to projections.

The portion for capital needs would provide $40 million in the five years it would be in effect, providing for improvements to city streets and drainage, a new or renovated city police and courts building, and rehabilitation of city fire stations.