The Arkansas Times is as good a place as any to illustrate the divided thinking on the city's penny sales tax to be voted on Sept. 13 (early voting started Tuesday).
The Times editorial board has endorsed the tax (which is itself divided: 5/8ths of a cent for city operations and 3/8ths for capital needs, the latter to be collected for 10 years), but Times senior editor Max Brantley has been fairly biting, characterizing, for example, the economic development portion of the capital tax as a "steaming pile of bull."
From talks with civic group heads, friends and political types — certainly not a scientific survey — it appears that community-minded people who usually don't mind paying taxes are swallowing hard this time, choking particularly on the capital tax. Here's one reason why: Should the combined penny increase tax pass and meet revenue projections of a 2 percent increase per year, the city will be awash in money — $500 million over 10 years. The penny would add $50 million a year to a city whose operating budget is now $191 million — a 26 percent increase. That's a pile of money for the city board and mayor to spend.
Not all are ambivalent. Businessmen, particularly realtors, uniformed and other overburdened employees of the city, and university types who support the research park funding included in the capital tax — those who stand to gain something — resoundingly support the penny; activists, like those who formed the underfunded but persistent "$500 Million Tax — Too Much!" ballot committee, think the penny is excessive and the city can't be trusted to spend money in declining areas of town.
Mayor Mark Stodola and the city board of directors, sensing that after three years of flat tax revenues (no longer do people in growing cities around Little Rock need to come here to shop at big box stores) and cutbacks in city spending and jobs voters might be receptive to raising the current half-penny sales tax (approved in 1994, it is the lowest in the state, as everyone knows by now), voted in July to call an election. To balance the budget, the city has left 230 jobs vacant (including uniformed personnel) and cut back on maintenance, funding to outside agencies and money for crime prevention and intervention programs. It's made one-time transfers of millions of dollars from solid waste and fleet funds to the general fund to make up for tax revenues that didn't rise to expectations and utility franchise fees lowered by state law a couple of years ago. Revenues are projected to come up $8 million short this year; the city came up short in budget years 2007, 2008 and 2009 as well.
There was only one no vote, from Ward 2 Director Ken Richardson, and one present vote, from Ward 1 Director Erma Hendrix. Ward 7 Director B.J. Wyrick tried but failed to separate out the economic development tax.
There are some obvious needs that all can agree should be addressed. The streets are in bad repair. Code enforcement is stretched past the limit. The fire department is using a 1976 ladder truck whose ladder is off limits to firefighters. The radio tower used by police, fire and ambulance to communicate is antiquated; a lightning strike put it out of business for a while last year. Our parks go unmowed and unkempt for lack of maintenance dollars.
The woes are city policies come home to roost, long time activists Jim Lynch and Kathy Wells say, the proof that growth does not pay for itself, contrary to what the city leadership has said in annexing land without imposing impact fees on new development. What the city is proposing, Lynch said, is a "huge, record-breaking tax increase for the same old, same old ... no changes in growth policies." Wells hit the roof recently at a Downtown Neighborhood Association debate on the tax with Lynch and Stodola when the mayor suggested that the downtown Ward 1 had grown in population. (It turns out he was thinking of certain census tracts within the ward.)
There is evidence of some uncertainty across town, in prosperous Ward 5.
Susan McFarlin, who heads a Chenal property owners association with the cumbersome name of Gibralter Heights Pointe West Timber Ridge, expressed her view on the tax: "I'm conflicted."
McFarlin said she'd been "covered-up" with pro-tax literature and even had a "door-to-door from a fireman." She sees a need for new revenues, but says the proposal is poorly timed and "so regressive. It hits the wrong people."
She also sees a need for new jobs, but is skeptical about the economic development portion of the capital tax, calling the $22 million research park the tax would fund "an amorphous thing."
The economic development part of the tax includes the research park, $10 million for purchase and infrastructure of land in the Little Rock Port area and $6 million for job recruitment, also known as the "slush fund" by detractors.
For many of those voters who fall into the "never met a tax they didn't like" category, this is a major stick in the craw. As the "500 Million Tax — Too Much!" ballot committee points out, the way the tax is structured means if you want street repairs and public safety infrastructure, you've got to vote for the research park.
A rundown on the items the tax would pay for, why the pro-forces say we need them, why the anti-forces say we don't:
Public safety: $41.2 million for capital needs (over 10 years), $14.8 million yearly for operations
At year four (the year on which the city has based all its projections for annual operating revenues from the new tax), the 5/8ths cent for operations would bring in about $15 million yearly, $5.6 million of which would be used to employ 52 additional police officers in the police department and keep 27 officers now funded by stimulus grants. (That would fill the 45 or so vacant uniformed positions that the LRPD has now.)
Lynch, one of the founders of the "$500 Million Tax — Too Much!" group, and others have pointed out a certain irony in Mayor Mark Stodola's State of the City boasts of an "astonishing" decrease in violent crime in Little Rock and his position that the city needs 79 new police officers. But Stodola says the city needs to fill its vacancies to improve response time, increase its community policing and reopen closed alert centers, man the 911 line (he said callers have on occasion gotten a busy signal) and the 311 non-emergency line. While the operations money would hire the LRPD and COPP officers, the 3/8ths cent for capital would pay the lion's share of the cost of 911/311 communications and call takers ($2.6 million over 10 years for 12 positions).
The operations tax would also let the city add 36 new firefighter positions and retain 18 grant positions ($3.9 million annually).
The capital tax would build two new police stations — one in midtown and a new headquarters and courts building — at a cost of $9 million each over 10 years. Southwest Little Rock and West Little Rock would get new fire stations. (There is already $2 million available in federal recovery funds for the West Little Rock station, a sum short about $800,000.)
Backers of the tax, including businessman Gary Smith, who spoke at an August rally by the Little Rock's Future pro-tax ballot committee, have suggested that unless we build more fire stations and hire more firefighters, we might have to pay more in homeowner insurance. Those who oppose the tax (and some of those who don't) scoff at that idea. Jay Bradford, the state insurance commissioner (and a supporter of the tax), called the warning a "stretch," but added that it was certainly possible that people could pay more for homeowners insurance if the fire department was underfunded. "If funding for the fire department is dramatically reduced, it could well affect class rating," he said.
Public works: $72 million capital over 10 years, $1.4 million operations annually.
Though developers are supposed to build sidewalks, Stodola says he thinks it's a city's responsibility. The public works tax, in addition to raising $67.5 million over 10 years for streets, street resurfacing and maintenance and drainage, would give the city $4.5 million over 10 years for sidewalk repair. If there's no clamor one year for sidewalk repair, the $450,000 in the fund could presumably go to other things, but Stodola says the tax money will be spent in the way the ordinance proposes and a citizen's committee will provide oversight.
There has been no money for street resurfacing for five years. This expenditure should be among the most welcome, if the 3/8ths capital tax passes. If it doesn't pass but the operations tax does, the city would allocate $716,000 annually to streets.
Jobs/economic development: $38 million
If you think channeling public dollars to private business ventures is a bad idea, this part of the 3/8ths capital tax could be a deal killer.
A controversial — or at least "amorphous" — proposal is the $22 million research park. The 3/8ths capital tax would raise $10 million to buy land and $12 million for a building and infrastructure.
The push for the park began in 2005 with realtor Dickson Flake, who in 2009 presented a report from ANGLE Technology Group (which consults and manages research parks). Envisioned was a 30-acre park close to the University of Arkansas at Little Rock, the University of Arkansas for Medical Sciences and Arkansas Children's Hospital, where scientific minds could help industry commercialize their research.
UAMS Chancellor Dan Rahn called the research park an "investment in the future," and a continuation of the work that UAMS' BioVentures does. BioVentures Director Mike Douglas said that "what we're doing is really peanuts" compared to what a research park could bring to the region. He cited the Virginia Biotechnology Research Park in Richmond, Va., where 66 biotech firms are located, as "a great model for us." Douglas described the scientists and engineers at UAMS and UALR as an "underutilized resource" for biotech and pharmaceutical companies and start-ups.
Started 12 years ago, BioVentures has generated a total of 130 patents, Rahn said, and 48 or 50 companies have formed, though not all of them successful. An economic analysis in 2009 of 21 of the companies said they'd created 532 jobs in Arkansas and had an economic impact of $26.5 million.
However, BioVentures has not yet broken even, because of the cost of patent filings nationally and internationally, Rahn said. "Long term," Rahn said, "it would be wonderful if there was revenue in excess of expense to allow us to invest in infrastructure," since BioVentures is at capacity. But he said UAMS has made no commitment to contributing to construction at the research park. Its contribution to the park would be "intellectual assets."
While the park is yet to exist, a park authority has already been appointed. On the board are five businessmen: Flake and C.J. Duvall (Allied Wireless Communications, Stodola's appointees); Ed Drilling (president of AT&T), Rahn's appointee; Little Rock Regional Chamber of Commerce CEO Jay Chessir in a seat reserved for the chamber, and former state Sen. Bob Johnson. Only two appointees have a background in science: Dr. Mary Good (UALR Donaghey College of Engineering and Information Technology) and BioVentures' Douglas.
Tax opponent Lynch said he is "somewhat sympathetic" to the idea of a research park, but said if it is "so damn important" to build, the county ought to share in the tax burden, as it did in the creation of Verizon Arena. Stodola doesn't buy that at all. "It's not a county issue," the mayor said.
The park has also come under fire from the "$500 Million Tax" and Arkansas Community Organizations for its potential deleterious impact on Ward 2, where it might be located. "$500 Million Tax" co-founder Robert Webb said the park could displace low-income residents in Ward 2 and would not provide jobs for them unless it was "to sweep up." In a letter opposing the sales tax, ACO wrote, "We remember urban renewal, the building of I-630 and the destruction of neighborhoods in the name of progress."
Stodola has taken offense at the "slush fund" nickname given to another proposal, to invest $6 million over 10 years in a job recruitment fund. "That's so far from the truth," he insisted. He said a portion would be used as a required match to state funds for infrastructure needs and the total is "equivalent of 1/13 of a penny." If Little Rock had a job recruitment fund, it might have been able to compete for an M&M/Mars production plant; instead, the company chose Topeka, Kan., which with county assistance provided $9 million in incentives.
Stodola also said that, contrary to the fears of detractors, the job recruitment dollars will "remain with the city" and not go to the Chamber of Commerce, which gets $200,000 annually from the city but declines to be specific on how it spends the money.
The capital tax would also provide $10 million over 10 years to add 715 acres to the Little Rock Port and provide infrastructure. Stodola says that over the past four years, the port has created 2,100 jobs; he dismisses criticism that most of the employees at the park do not live in Little Rock. They still buy things here, he said.
This much-debated job creation portion of the tax accounts for only 7 percent of the penny tax revenues, Stodola repeats.
Parks and Recreation, zoo and tourism: $28.2 million capital revenues over 10 years, $4 million in annual operating revenues.
The Parks and Recreation Department budget is the first to be raided by the city when it has unexpected revenue needs. It's got 17 unfilled positions, which means it can only do so much maintenance. As a result, Little Rock — "The City in a Park," as parks would like it to be known — has an embarrassing "C" rating. War Memorial Park is getting an overhaul thanks to the parks bond re-issue of $7 million — but the department hasn't got a penny for maintenance. The operations tax would provide $1.5 million to bring the system up to a "B" rating. The Museum of Military History in MacArthur Park would get a $75,000 boost annually.
A big ticket in the 3/8ths cent: $8 million for the Little Rock Zoo. Too, City Director Doris Wright will finally get to see her West Central Community Center built, to the tune of $6 million (and $634,000 in operating money annually).
The capital tax would also provide $4.5 million in park upgrades over 10 years. Western Hills Park, which is undeveloped, would get $1 million over 10 years, and so would the Natural Steps Ball Complex. There's also money for MacArthur Park, War Memorial, Crump, Otter Creek and the burned 12th Street senior center (which is also getting insurance money) in the capital budget.
Other priorities: $16.2 million in capital revenues, $11.2 million in annual operating revenues.
The capital tax would provide $9.2 million over 10 years to replace the city's fleet, and $7 million for "information technology capital" and related maintenance. The operations tax would create two new CATA bus routes, to Pulaski Tech and John Barrow, and add $4 million to police, fire and non-uniform pension funds. One-time revenue items could draw from a $4.3 million account funded by the operations tax.
On Tuesday, after the Times has gone to press, a panel is to speak at the Clinton School of Public Service on the tax. Bill Vickery, a Republican strategist, is one of the panelists.
"If I had to guess," Vickery said last week, "I'd guess that it will not pass." The environment — political and economic — "is extremely difficult."
The Tea Party, predictably, has come out against the tax. But Vickery said that with local issues, "partisanship flies out the door and it's more whose ox is being gored."
The research park idea, Vickery believes, is "very innovative and interesting and something I support personally, but politically it's almost impossible to explain to voters."
If you want to get voters motivated these days, Vickery said, you've got to focus on the negatives, on the dire results of not voting for something.
Stodola expressed surprise at Vickery's pessimism, saying that of 11 sales tax elections in Arkansas this year, only Conway had been unsuccessful. He said his own polling showed the tax would pass.
And though he wasn't responding to Vickery, Stodola did express some negatives. "Do you want 15 percent of your police department vacant?" Cratered streets? A 1976 firetruck? A busy signal when you call 911?
Panelist Bobby Roberts, the Central Arkansas Library System director who has been involved in several successful millage campaigns, will talk about which precincts the tax must carry to be successful — those just west of Mississippi. He predicts voters in the Heights and Hillcrest neighborhoods will pass the tax (and if yard signs are any indication, he's right there) and voters in parts of Chenal will, too, but the tax will have a harder time in low-income precincts downtown and in Southwest Little Rock.
"I don't get the sense that there's been a sudden burst of new confidence in Little Rock city government" in his neighborhood, said attorney (and former Republican state Rep.) Dan Greenberg, who lives in Chenal. "My experience as a person who lives out here is that people ... I represented as a state legislator are relatively anti-tax. That's the disposition of a significant number of people who live out here."
But Greenberg doesn't speak for the residents of the small Chenal neighborhood of Hallen Court, whose neighborhood association head Gregory Bruce took a poll and found "90 percent" of his neighbors (about 18 people) in favor of the tax and "the other 10 percent weren't even aware of the potential tax increase." (He offered the neighborhood demographics: 50 percent are doctors, 40 percent are business owners and 10 percent are CEOs or CFOs.) "My family is voting for it," Bruce said. "If you stop and think about it it's logical. The cost of living has gone up."
But half the amount the city is asking would do, Jim Lynch says. "We ought to be talking half of this, max." He said the city is "trying to capitalize on a budget pinch to go for the big tuna."
City Director Ken Richardson sounded a similar note after the pro-tax rally earlier in August. He wore a wry grin at the rally when the mayor proclaimed that the tax had the full support of the board. Richardson voted against it, after his proposal to sunset the capital tax after four years failed to pass. He said he is not actively campaigning against the tax, however.
The proposal for the penny tax "is not connected to any vision," Richardson complained. "One thing I recommended [to the board] was that we look at Future Little Rock" and see what of that 2004 initiative was left undone. He would have liked to see dollars directed to employers to encourage the training and hiring of disconnected youth and others having trouble finding work. "When you do ... they become taxpayers," he said.
There's nothing in the plan "I could see that addresses urban blight," Richardson said. And finally, he said the mayor, by characterizing the penny's burden on middle-income folks as "only" $50 a year, "may be out of touch."