More on a Little Rock sales tax | Arkansas Blog

More on a Little Rock sales tax

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I mentioned last night a survey underway by source unknown about voters' feelings about a Little Rock sales tax increase. This morning, I got an account from Kathy Wells of an appearance City Manager Bruce Moore made Sept. 11 before the Coalition of Little Rock Neighborhoods. Moore made a reference to a potential half-cent sales tax increase as a cure to city money problems. He said he favored a general tax increase over a dedicated tax for parks, another idea that has been floated. I agree on that. He signaled personal reservations about a hamburger tax increase, a means to get money to the city by using it to finance parks. That would free money for other purposes.

The report follows.

COALITION OF LITTLE ROCK NEIGHBORHOODS NEWSLETTER

City Mgr. Bruce Moore briefed members of the Coalition of Greater LR Neighborhoods at the Sep. 11 session, and he laid the groundwork for a half-cent sales-tax increase, which would bring in $23 million in operating revenues to Little Rock, if approved by the voters. Coalition members and guests were wary.

Moore firmly upheld the lock on the city's $9 million Reserve Fund. This money is short of the $13 million goal officials have set for the needed reserves, Moore said. He said he would hold the money against the day disaster strikes, such a a tornado, or similar major event of injury and loss of property, like a 9-11 terrorist attack. Coalition members asked why recent shortfalls in revenues had not triggered use of the Reserve Fund.

The city will spend $1 million less in the coming year, as a short-term loan expires, and the money is repaid, and there is no new loan taken, Moore continued. He said this will hurt, since this is the money used for new police cars, and other equipment needs. He noted the city has not arranged a short-term loan the last two years.

Most city money is spent on personnel, and the public safety segment, including police, fire PIT and code enforcement, account for 70 percent of the city's total budget, Moore told the Coalition. He provided these numbers:

* $183,722 million - Total Revenues of the Fleet Services, Enterprise, Street and General Funds combined

* The General Fund, which uses the most money, originally totaled $131,149 million in Revenues in the 2010 budget

* Expenditures total the same in the General Fund, with a beginning and ending balance of $14.6 million

* Money left from 2009 was used this year to keep departments running, totaling $424,440; there's no repeat of this for the 2011 budget

The city has controlled spending when revenues fell behind by holding positions vacant, Moore continued. He said he was "not proud" of this policy, and that he wanted to fill these jobs in the future. There are 40 vacancies in the police department, but a recruit class of 15 is being trained, thanks to federal stimulus money, he said.

Mid-year cuts to meet revenue shortfalls resulted in the General Fund being reduced from $131 to $129 million, Moore said. His handout showed cuts in all departments, except for the Finance Dept. and the Board of Directors. Expenditures for the first half of 2010 are $4.3 million below the first half of 2009.

"This has been the toughest year of my tenure," Moore told Coalition members.

The city begins budgeting for next year in October, he continued, and the sales-tax revenue is beginning to inch up, so "I'm feeling a lot better."

For the first time, this year, the city charged the Street Fund for some standard practices, as a way to live within the means of the city, Moore said. There's a 3-mill Road Tax that goes to this fund directly from taxpayers.

Asked what additional resources the city has to get more money, Moore outlined these possibilities:

* an additional sales tax - half a cent would bring an estimated 23 million for operations

* a dedicated tax to support the parks and the Zoo, which would allow shifting an equal $10 million back to the General Fund

* building permits, which have remained the same the past five years

* a one-cent hamburger tax paid through restaurants and hotels, a third penny, administered by the LR Advertising & Promotion Commission

* a dedicated fourth penny hamburger tax to support parks, which is possible by a vote of the LR Board of Directors

* a commuter tax, or payroll tax, which would take a vote of the people, and would be the first ever applied in Arkansas

Moore said he favored more general sales tax, and opposed any dedicated tax, such as has been proposed by Dir. Brad Cazort a few months ago. The city needs more than $10 million, which Cazort's proposal would generate, Moore said, and the city might be hurt by locking in spending in one area, when needs are elsewhere.

He said he opposed raising building-permit fees, because this would hurt business.

"We must have a community discussion," Moore said. He said he recognized code-enforcement officers could not get all their work done with 10 vacancies in the department.

"There's no more adjustments to make," Moore told the Coalition.

Asked about the 5-mill property tax, he said he would check on that status and report later. His memo said the city imposes the maximum rate, so there's no more revenue possible from this source.

He noted the utility franchise fees are at their maximum. Thanks to a state law, Entergy must agree to any increased fee imposed on electric bills, and they always say No when he asks for more, Moore said.

Asked about amending that special-interest law in the upcoming General Assembly, Moore said that was unlikely, and Little Rock was not seeking any change.

The city does want a change, he added, in the state law on the contribution it must make to the self-insurance pool cities have in common through the Arkansas Municipal League. Rural cities dominate this body, and weighted the obligation toward Little Rock, so our city pays more than the rest, he said. This would free up "significant dollars," he said. However, if successful, he acknowledged the police and firefighter pension funds would seek those dollars to shore up these funds.

Moore said he did not favor adding a one-cent hamburger tax, which would bring an estimated $3 million to the city. When he proposed this for the Clinton Presidential Library, Moore continued, restaurant owners objected and said apply the tax only to hotel bills. That would bring $1 million, he said.

He also opposed any payroll tax, Moore said, since this by law must apply to city resident workers on these payroll, right alongside the commuters.

Coalition members raised the issue of contracts with the police and firefighters, and the raises provided in those agreements. Moore obtained a concession from those unions this year to delay the pay raise provided in the current contract. The 2010 increase will now be paid in 2011. The same is true of the AFSME contract with non-uniformed workers, he noted.

Moore said he had arranged a four-year contract with raises, and he would not in future agree to so many years in a contract. He added that he intended to add language to the new contracts that would provide for delays in raises when the "fiscal health of the city" falters.

Asked about money to demolish derelict homes, Moore said there was money enough to take out 10 houses in the NSP program of 100 houses.and there was an emergency fund for burned homes, too.

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