Funding shift rides on taxes, CATA is told

Consultants advise raising levies on sales or property

Increasing property or sales taxes is the only potential avenue available to raise enough money to provide dedicated funding to Central Arkansas Transit Authority, a consultant told the agency’s board of directors Tuesday.

It would take a 2-mill tax increase or a rise in the sales tax of one-quarter percentage point to maintain existing service with modest improvements in service, according to documents provided by Nelson/Nygaard, a national consultant, with a focus on transit, that CATA hired to guide its long-range planning.

CATA now requires about $12.7 million annually in local funding, primarily direct contributions from Little Rock, North Little Rock, Pulaski County, Sherwood, Jacksonville and Maumelle. The agency’s total yearly budget is about $17.2 million, with the balance coming from federal and state grants.

A 2-mill increase would add about $80 annually to the “average” taxpayer’s bill, according to Nelson/Nygaard. The sales tax increase would add about $84 annually.

A mill is one-tenth of 1 cent. One mill levied on an assessed value of $1,000 yields $1 in property taxes. Arkansas counties assess property at 20 percent of appraised value, so a $100,000 house has an assessed value of $20,000.

In Little Rock, property owners are levied a total of 70.1 mills, which is the highest rate in Pulaski County.

The city also has a total sales tax of 9 percent now, consisting of a 6.5 percent statewide sales tax, a 1 percent county sales tax and a 1.5 percent city sales tax.

Sales taxes are the most common source of funding for local and regional transit services, according to the University Transportation Center for Mobility, an arm of the Texas Transportation Institute at Texas A&M University.

Sales taxes “generally provide the greatest revenue yield and stability and are broadly accepted as a source of revenue for public transportation,” according to the transportation research center.

Transit supporters in central Arkansas have spent more than a year in strategic planning as part of an effort to allow the agency more independence in determining routes as well as offer more services. CATA is limited in route changes now because its funding is based, in part, on the route mileage in the

cities and the county.

A final decision on funding, which likely would require a popular vote, and the level of service won’t come until early summer, but Tuesday marked the first time detailed options on a dedicated tax was presented at a meeting of the agency’s board. Earlier this year, the board voted to re-brand itself as Rock Region Metro and overhaul the look of the CATA fleet that would reflect the changes.

“We’re trying to figure out what the best mechanism is to support the projects we need to roll out,” CATA executive director Jarod Varner said after the meeting. “How do we improve services, how do we roll out major investments along key corridors?

“Everyone I talked to … there’s a lot of favorable responses — yes, it’s a no-brainer, we need dedicated funding for transit. It’s just that we need to figure out which is the most appropriate source.”

The planners are weighing a host of service options, ranging from maintaining existing routes to significantly increasing the frequency of those routes. Increasing the number of times the routes are run, according to the consultants, would cost an additional $4.6 million annually but boost ridership by almost 30 percent.

Also to be considered is bus rapid transit, which are high-capacity buses that run on dedicated routes. Investing in that transit mode would cost another $15.7 million a year and would increase ridership by 5 percent, according to Nelson/ Nygaard.

Light rail service would cost $25.2 million annually. Even though ridership would increase by only 5 percent, light rail service offers economic-development benefits, primarily around its stations, the consultant said.

Though no vote was taken by the board Tuesday, some members offered comments.

Sara Lenehan, Little Rock’s finance director, said she didn’t think voters would be excited about voting for a new tax dedicated to transit if no improvements were on the table.

Another board member, Jimmy Moses, said public support can’t be sought without changes to the River Rail trolley in downtown Little Rock and North Little Rock.

The trolley “is the Achilles heel of our overall system,” he said. “A lot of people think it’s a waste of money, it doesn’t go anywhere, it doesn’t serve anyone, it’s just … frivolous. What I really think is that with some modification of what we’ve got we can turn it into an excellent piece of our system.

“I just think we just can’t leave it and say it’s OK. I think the voters will come back on us and say we’re not spending that money wisely even though it, as it relates to our budget, it’s not a large part of it. But in terms of image and what it does, it needs to be worked on.”

Another board member, Little Rock City Manager Bruce Moore, said transit boosters needed to continue to move deliberately. He cited a November survey of 400 Pulaski County voters by the agency’s consultants that showed support was roughly even for an unspecified tax for transit. Further, other parts of the community want to tap additional revenue.

“Just looking at the poll numbers, it is pretty split down the middle,” he said. “I think there is a lot of education we have to do. I think we have to talk to all of our partners. It is a little premature to say that I’d be more supportive of a sales tax or a property tax. There’s a lot of needs in the community right now.”

The Pulaski County Special School District has announced it will seek a increase in its millage in a May 12 special election. The Little Rock School District contemplated one before the district was taken over by the state.

“It’s good information at this point,” Moore said of Tuesday’s briefing. “I think we have to have a lot more dialogue at this point before we can really say which funding mechanism is most appropriate.

“I believe we need some overall improvements to the transit system. We just can’t keep the status quo. It’s not viable. I don’t favor one [alternative] over another, but I do think we need to look at this holistically.”