Wage freeze, tourism spending key items on Fort Smith agenda

Freezing wages and warming tourism were the hot topics for the last of two special meetings held Tuesday (Aug. 25) by the Fort Smith Board of Directors to plan for the 2010 budget.

The first meeting was held Aug. 17, during which City Administrator Dennis Kelly recommended a wage freeze for all city employees in 2010, and proposed a broad plan to expand the city’s tourism and recreation assets through implementation of a 3% prepared food tax.

WAGES
After Kelly reiterated his request to hold fast on salaries in 2010, City Director Kevin Settle noted that many in the private sector are also seeing wages frozen or cut. He noted that in the past six years with his employer, the workforce have seen three wage increases. Settle added that he and other salaried colleagues at his employer (Exide Technologies in Fort Smith) are taking week-long furloughs (non-paid leave) in the near future.

“It’s tough out there. I don’t like freezing wages, but I feel the pain,” Settle said, noting his support for Kelly’s request.

City Director Cole Goodman agreed with Settle, and added that its better to freeze wages than cut jobs.

But City Directors Don Hutchings and Steve Tyler said it sends a mixed message to talk about holding wages at the same time the city proposes a multi-million dollar plan to expand tourism and recreation facilities.

“It’s a big mistake,” Hutchings said of proposing a wage freeze when also proposing the tourism expansions.

But Directors Gary Campbell, Cole Goodman and Settle reminded the others that the tourism projects and the wage issues were realities of two separate pots of money. Goodman said citizens have to know that the “funding sources are different” and that the tourism and recreation projects have the potential to “make things better for everyone.” Director Bill Maddox, who has a reputation for opposing expansive new programs, agreed with Goodman’s comments.

Settle said if a wage freeze is enacted that the policy comes with a caveat that the policy will be reviewed in mid-2009 to see if economic conditions might allow raises to return in the second half of the year.

The board is likely to decide on the matter by November.

TOURISM/RECREATION FUNDING
In opening the dialogue on his proposed 3% prepared food tax, Kelly said his simple request to the board is, “What do you want to do?”

The bottom line of what Kelly presented Aug. 17 is $11.55 million in upfront capital costs, with roughly $3.55 million in ongoing annual costs funded by a 3% prepared foods tax — aka, restaurant tax — that could potentially generate $27.54 million in the first five years. More than 40% of restaurant taxes are paid by those outside Fort Smith, meaning the city generates $1 in tourism-related improvements for about 60 cents. (Link here for details on Kelly’s proposal.)

The main priority of the funding is to fix an estimated $1.8 million gap in convention center funding that will become problematic in 2012. The city’s portion of the state’s tourism turnback funds are set to expire in 2010. The city received around $1.8 million annually from the turnback program. Between 2001 and 2007, the city collected $13.23 million in turnback funds, with $4.36 million of that used to help pay down the 1997 sales and use tax bond debt.

Maddox was the first director to comment, suggesting the city use a portion of the existing 1-cent street tax and returning the business license fee (could generate up to $1.5 million annually) to fund the tourism/recreation asset expansion.

“That (business license fee) is a source of revenue that needs to be presented to the chamber of commerce to get their backing,” Maddox said.

Settle encouraged the city staff to begin working on maps and other visual aids that will help citizens get a better grasp on what is being presented. He said maps of trails and other new facilities are needed “so people can see what we’re talking about.”

The directors asked Kelly to prioritize the projects in the plan and present the priorities in a special study session before the end of the year.

Kelly agreed, saying there is “tons of due diligence to do” on plan details, and that it would be up to 90 days before substantive information would be available. Kelly said initial city staff discussions have suggested finding convention center funding is the first priority, with tourism/recreation projects that create the most jobs on the next priority level.

Kelly also agreed to work in funding options like those offered by Maddox.

“You have a tremendous opportunity for mix-and-match here to get the job done,” Kelly said of potential funding options.