1-Percent Sales Tax On June Ballot

ELECTION SET FOR JUNE 13

FARMINGTON — The sales tax rate for the city of Farmington would remain in line with most of the other towns and cities in Northwest Arkansas, if voters decide in favor of continuing a 1-percent sales tax on June 13.

Farmington City Council voted in April to call a special June 13 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.

If approved by voters, the sales tax would replace an existing 1 percent sales tax set to expire Oct. 1. 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 goes 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.

Currently, the city of Farmington collects two 1-percent sales taxes, for a sales tax rate of 2 percent. One tax is used for the sewer bond issue and revenue from the second tax is used for general operating expenses. Each tax brings in about $688,000 per year. The balance on the sewer bond issue is about $685,000.

If voters approve the new sales tax, Farmington’s sales tax rate will remain the same at 2 percent. The new tax would replace the existing tax on Oct. 1.

Most cities and towns in Washington and Benton counties have a 2-percent sales tax rate, according to the Arkansas Department of Finance and Administration website. These cities include Lincoln, Tontitown, Centerton, Fayetteville, Springdale, Bentonville, Gravette and Siloam Springs.

Three cities collect more than Farmington. Prairie Grove has a 2.25-percent sales tax rate. Elkins’ rate is 2.75 percent and West Fork has a 3-percent sales tax rate.

Two cities fall under 2 percent. Gentry has a 1.125 percent sales tax rate and Pea Ridge collects a 1-percent sales tax.

Mayor Ernie Penn said he wants voters to realize that voting for the sales tax on June 13 does not mean the city’s sales tax rate will go up.

“This will not increase their taxes,” Penn said. “It’s just going for a new purpose.”

He added, “I want this to be a positive thing for our voters. It’s a continuation of a penny we have now and continuing it with different purposes.”

The election ballot will have three questions.

Voters will be asked to vote:

For or Against a 1-percent sales tax.

For or Against issuing up to $2.8 million in street improvement bonds.

For or Against issuing up to $2.3 million for park and recreational improvement bonds.

If all three questions are approved, the city will use proceeds from one-half of the 1-percent sales tax to pay off the two bond issues and one-half of the sales tax to go into the general operating fund.

The difference between the existing 1-percent sales tax and the one on the election ballot is that the existing sales tax has a sunset clause and can only be collected for the sewer debt. On June 13, voters will be asked to approve a 1-percent sales tax that will be permanent.

The two new bond issues for park improvements and street improvements would be 20-year bond issues. When those debts are paid off, all of the sales tax revenue from the new 1-cent tax would go into the city’s general fund for operations and maintenance. Making the tax permanent, Penn said, gives the city the ability to issue additional bond issues in the future without having to go back to the voters.

“We would already have the money (to pay back a bond issue),” Penn said.