Farmington Calls Special Election For Sales Tax

WOULD REPLACE EXISTING TAX SET TO EXPIRE

FARMINGTON — Farmington City Council on Monday night approved an ordinance calling a special election to ask voters to adopt a 1 percent sales-and-use tax with revenues to be used for debt service on two new bond issues and for general operating expenses. The special election is June 13. If approved by voters, the sales tax would replace an existing 1 percent sales tax set to expire in the coming months. Revenue from the existing 1 percent sales tax is dedicated to debt service on a sewer bond issue. The city is close to paying off the sewer bonds. When the bond is paid off, the sales tax will go off the books.

City officials want to continue collecting the 1 percent sales tax without a disruption in revenues. To do that, voters will have to approve a new tax before the bond issue is paid off.

Mayor Ernie Penn emphasized at the meeting Monday that the city’s local sales tax rate would not increase if voters approve the request.

Currently, the city collects two 1 percent sales taxes. One raises money for the general operation budget, while the other is dedicated to sewer debt service.

“This will replace one that will expire,” Penn said. “It will be a continuance with a different purpose.”

Along with the ordinance calling for a special election, council members approved two other ordinances related to the sales-tax question.

One ordinance levies a 1 percent sales tax. This ordinance will only go into effect if the question is approved by voters on June 13.

Ryan Bowman with Friday, Eldredge & Clark law firm said the existing sales tax for sewer bonds would go off the books on Oct. 1. If voters approve a sales tax on

June 13, then the new tax would be effective Oct. 1.

The transition would then be “seamless,” Bowman said.

The third ordinance calls a special election June 13 to allow the city to issue bonds for street improvements and park and recreational improvements. Voters will be asked to vote for or against on each as a separate bond issue.

The ordinance shows that the city would issue a maximum of $2.8 million in bonds for street improvements, which could include costs for curb and gutter, drainage, lighting, utility adjustments and sidewalks. The bond issue also could be used for expenses related to a new Public Works building.

The city would issue a maximum of $ 2.3 million for park and recreational improvements, which could include equipment, parking, drainage and lighting for any existing city park facilities.

Penn said most of the park improvements would be at Creekside Park.

“It’s an exciting time for the park,” Penn said.

Kevin Faught with Stephens Inc., of Fayetteville, said half of the revenue from the 1 percent sales tax would be dedicated to paying off the bonds with a 20-year maturity.

If voters approve the 1 percent sales tax and two bond issues, bonds would be offered in August, with a closing in late September, Faught said.

The other half of the 1 percent sales tax would be dedicated for operations and maintenance costs of the city.

Faught said that many cities choose to take the same route with their salestax collections. A portion is used for debt service and a portion goes to general operating expenses.

“You can build the facilities but you need money to operate them,” Faught said.

Bowman told the City Council that to accomplish all the city wants to accomplish, it would need a “yes” vote on all questions on the election ballot.

If voters approve the 1 percent sales tax but not the bond issues, then the tax would be collected and go into the city’s General Fund. If the tax passes and only one bond issue is approved, then the city would just offer the bonds for those projects.

If the sales tax is approved, it would be a permanent tax, Bowman said after the meeting. He said this tax would fall under a different state law from the one used to pay off sewer bonds. It would not go off the books when the bond issues are paid off but would continue to be collected.

Penn urged aldermen to be informed and to be able to answer questions about the sales tax and bond issues. He also asked them to be positive, noting that if anyone is negative it could affect the outcome of the election.