Refuse bad deal

Sales-tax hike would crush the Rock

Little Rock is home. My children and grandchildren live here, and I want the best for our city. I have voted for just about every tax increase that has come up in my 41 years as a resident in Little Rock.

I am voting against the 41 percent increase in Little Rock’s city sales tax. Here are the facts.

Little Rock only gets about half of its general revenue from the city sales tax. Most of the rest comes from other city taxes that we pay. Although our sales-tax rate is slightly higher than some other cities, it is also slightly lower than some. Little

Rock has the highest rates of property taxes, utility taxes and business taxes of any major city in the state.

Our city rates on real and personal property are more than twice as high as Fayetteville’s, three times higher than Bentonville’s, and eight times higher than Bryant’s.

Our business taxes are the highest of any major city in Arkansas. A large car dealer in Little Rock would pay about $200,000 for its business license and property tax. A car dealer in Bryant with the same exact inventory value would pay about $15,000. The same car dealer in Fayetteville would pay $15 for a business license, and about $54,000 in property taxes. Some cities like Conway don’t collect taxes for a business license, and Conway’s city property taxes are less than one-third of Little Rock’s.

Little Rock gets about $30 million a year from “franchise taxes.” These are simply sales taxes set by Little Rock, collected by the utilities on our monthly bills, and handed over to the city. Little Rock’s taxes are astronomical compared to other cities. These taxes are especially regressive and damaging to our citizens on tight budgets.

Please review your water bill. You will see that you pay a “Franchise Fee” of 10 percent of your bill. Little Rock, North Little Rock, Sherwood and Maumelle get water from Central Arkansas Water, but on average you pay twice as much franchise tax as residents of the other cities pay. Little Rock charges city sales tax on both your water charges and the franchise tax. The resulting combined rate of city tax on your water bill is 12.75 percent. Most people are not aware that we pay this tax to the city, and your bill does not explain it. Our other franchise taxes are also at the highest levels.

Rebuild the Rock has sent me umpteen slick-paper mail pieces, and not a single one of them has any substance to it whatsoever. They have nice pictures, but no facts, as if the money comes from nowhere. Nothing is mentioned about the fact that these dollars are raised by increasing sales taxes on the necessities of life, like groceries, water, and utilities.

The issue at hand is not lack of funds. Little Rock’s sales-tax collections at the current rates are projected to increase about $20 million in 2021 versus 2020. As real estate values increase and reassessment occurs, Little Rock’s 15.1 mills property tax rate will yield additional money. Little Rock will receive over $37 million in federal covid relief funds in 2021 and 2022. Little Rock also has about $20 million in unbudgeted capital funds for 2021 which are available for park improvements and other capital projects.

All in all, Little Rock has over $75 million in unbudgeted funds which could be used to make our city more attractive as a place to live. We have this money because we already tax at the highest levels.

Little Rock has a spending problem. Last year our administrative costs were about $3.5 million over budget. We have cut lower-paid workers, and added supervisors, support staff and administrative personnel. This is backwards.

There is no assurance that the additional money collected will be spent on anything in particular. The board passed a non-binding resolution, which can be changed, or ignored. Much of the money is planned for facilities and programs that will require additional paid personnel. The proposed tax will expire in 10 years, leaving the city with higher fixed costs and no way to pay them.

City money ought to be spent by the city on city business, like public safety, good roads, and parks. This is the hard work that the city should be about doing, and we have the money to do it. Little Rock should not raise taxes on food and utilities, especially when we are already the highest-taxing city in the state.

Let’s vote no on this tax, and then ask our city board, in public, to talk about the specific projects which the voters might consider as we decide whether to renew the three-eighth-cent capital improvement tax which expires at the end of 2021.