North Little Rock Mayor Joe Smith pitched me this week on a city sales tax increase. If still a resident, I'd be favorably inclined.
A garage apartment in Military Heights was my first Arkansas home 44 years ago. North Little Rock felt right to me, a product of a southwest Louisiana working- class town with a big unionized industrial workforce, much like that working the Missouri Pacific Railroad shop yards near my first Arkansas home. The mayor-council government is close to the people. My dog got loose one day and, not long after, the North Little Rock mayor (Bob Rosamond) drove up with my errant mutt in his back seat.
Joe Smith, a city government fixture, rose to the mayor's office overlooking Main Street when Pat Hays finally retired. He didn't walk into a bed of roses.
North Little Rock has managed to grow a bit since the last Census in 2010, by about 4,000 people, but it is stressed. In 10 years, sales tax receipts have grown by barely $1 million, less than three-tenths of 1 percent a year. Expenses have grown by a reasonable 3 percent a year, or more than $17 million
A tea party follower has already risen to say the city could meet expenses by not giving pay raises. Smith figures pay raises are needed to continue to compete for police and firefighters. But pay freezes alone wouldn't solve North Little Rock's problems. It's been steadily drawing down reserve funds to balance the budget, a process that can last only two more years. Even a 7.5 percent payroll cut would save only $2.8 million a year, while lopping off 13 police officers for starters.
The city could start charging for trash pickup, a free service unheard of in the rest of the state. That would offset the annual reserve drawdown, but no more.
How, you might ask, does North Little Rock afford free trash pickup? Word: Electricity. The city owns its electric department. It makes a profit on it, about equivalent to the profit Entergy draws out of its Arkansas customers. The profit goes to city services. It's a hidden and not particularly good way to operate a government. Revenues there have been declining, too, as people switch to more efficient air conditioners and other energy saving.
So Smith and the city council came up with this plan. Raise the sales tax by 1 cent, from the current penny. Spend a half-cent on capital needs and levy it only for five years to rebuild police and fire stations and address street and drainage problems. The other half-cent would be permanent. Smith sells that by noting that about 40 percent of sales taxes come from shoppers and fun-seekers who live outside the city.
Smith won points with me with unsolicited comments on a couple of pet issues.
He won't blame lagging sales tax revenue solely on the internet, as Little Rock officials try to do. He volunteered that the city also has lost business to suburbanites — Conway, Cabot, Searcy and Co. — whose expanded retail options keep them home.
He volunteered, too, in response to my mention of new residential development downtown, on the river road west of downtown and in subdivisions east of town, that "rooftops" don't necessarily mean a revenue increase for the city. Unlike Little Rock officials, Smith says that new subdivisions — welcome though the residents are — come at a cost of extending city services, including new fire stations, trash routes, police coverage and street maintenance.
I liked, too, that Smith's talking points draw comparisons with the "fair-haired" boomtowns of Northwest Arkansas. You won't find free sanitation there, he notes. And the sales tax rates in the major cities along the golden corridor from Fort Smith to Bentonville already stand at 2 percent.
The new tax, by the way, won't provide a dollar for Smith's dream of building a visitor-attracting plaza in the heart of downtown. But the idea is worth a mention. A city that's attractive to millennials could realize a significant economic boost by merely increasing its percentage of college graduate residents by 1 percent, he says.
Altogether, not a bad pitch. Smith says he'll be making it at least 30 times in every neighborhood before the Aug. 8 election.