In Benton County, JPs study a tax for project

BENTONVILLE — Benton County’s Finance Committee on Thursday reviewed steps needed for a sales tax increase as the funding method for a new courts building.

The justices of the peace heard a report on options from Jill Drewyor, an attorney with the Mitchell- Williams law firm, which has experience in municipal financing. Drewyor told the panel the county can’t increase its 1 percent sales tax or reapportion the revenue.

The sales tax revenue is divided among the county and cities on a per capita basis, and Benton County receives just under 20 percent of the revenue. For 2015, the county has projected its sales tax revenue at $ 7.3 million, the same amount the county received in 2014. Sales tax receipts for the year show the county $ 264,407 ahead of its budget target.

In a May 7 presentation to the committee, Bob Wright, with Crews & Associates, told the committee that revenue from courts costs and fines is probably insufficient for a project of that size, particularly since the revenue already is included in the budget.

A property- ax or sales- tax increase are more adequate sources of revenue, but both require voter approval, Wright said. In Wright’s briefing, he gave the justices of the peace a breakdown of revenue from sales tax increases ranging from a one- eighth percent tax increase that would raise about $ 4.4 million a year, to a three- quarters percent tax increase that would raise about $ 26.5 million a year.

Drewyor said the county can issue bonds to finance the building but isn’t required to do so. If the revenue from a sales tax levied for three years or less is sufficient to pay for the planned improvements, the county can dispense with the bonds and appropriate the sales tax revenue to pay for the project directly.

A sales tax can be designated for use by the county, meaning all of the proceeds will go to the project. Some justices of the peace suggested designating a portion of the tax, possibly an eighth percent, for maintenance and operating costs. Kurt Moore of District 13 argued against a proposal that would retain any of the tax increase.

“The problem with the one- eighth cent residual tax is it’s going to generate about $ 4.5 million a year,” Moore said. “It’s going to be hard to get the residents of the county to swallow. I’ve been an advocate of having something that’s one- year- and- done. If that’s not enough, the county will kick in whatever is needed to complete the project.”

The committee delayed until 2016 a proposal to end countywide cleanup events and replace them with an expanded convenience center.

Officials began to search for alternatives last year because of increasing costs. They also began to look at ways to the expand the convenience center, which offers similar services.

The Public Safety Committee heard the proposal Monday and recommended it to the Finance Committee for further discussion.