Opposition to restaurant tax gearing up — again

Eddie York is again fired up and ready to marshal forces to oppose enactment of a 1% prepared food tax that would support the Fort Smith Convention Center.

York, owner of a catering service and Art’s BBQ in Fort Smith, began in July to organize area restaurant owners to oppose what was then expected to be a Spring 2011 vote on the 1% tax. The organizing effort was put on hold when the Fort Smith Board of Directors did not schedule a vote.

“We’re going to rare up against it,” York said Thursday (Jan. 20) about a renewed board effort to consider the tax. “I’m going to get all these guys back together and we are going to do everything under the sun to let them know we are against it.”

The Fort Smith board spent most of 2008, 2009 and 2010 seeking a solution to plug the annual deficit. A state turnback program ended in June 2010 from which the city received about $1.8 million a year. In 2010, the city received only $888,723. A fund balance will allow the city to cover the convention center shortfall for most of 2011. City Administrator Ray Gosack said the convention center fund at the end of 2011 will have a balance of a little more than $300,000.

An ad hoc convention center committee formed by the city board met several times in Spring 2010 and reviewed many funding options, including a 1% hospitality tax, finding cuts in the city’s roughly $40 million operating budget, reallocating a portion of the city’s 1% street tax, re-instituting a business license fee and finding a 3rd party operator.

That group eventually endorsed a 1% prepared food tax.

On Tuesday (Jan. 25), the board will review a draft ordinance that would enact a 1% prepared tax. The tax, according to state law, would apply to “restaurants, cafes, cafeterias, delicatessens, drive-in restaurants, carry-out restaurants, concession stands, convenience stores, and grocery store-restaurants from the sale of prepared food and beverages.”

The board is also expected to review a detailed management contract between the city of Fort Smith, which owns the convention center, and the Fort Smith Advertising & Promotion Commission, which would assume control of convention center operations if the tax is approved by the board. State law allows only an A&P to collect and manage proceeds of hospitality taxes.

On Jan. 11, Fort Smith Convention & Visitors Bureau Executive Director Claude Legris presented the board a broad proposal that would use an estimated $1.8 million in revenue from a 1% prepared food tax to consolidate the convention center with the Fort Smith Advertising & Promotion Commission.

York said Thursday the convention center “is a great deal for Fort Smith and we need to do all we can to support it,” but restaurants shouldn’t be “picked on” for the funding solution.

“We are already taxed to death,” York said. “Where is the end to it, and why are they picking on the restaurants? … A majority of restaurant owners in Fort Smith will say that the convention center doesn’t bring them any business or just very little business.”

York has renewed the effort to organize restaurant owners, and hopes to soon visit with Fort Smith Mayor Sandy Sanders about the issue. York also doubts that City Director Philip Merry Jr. and other directors who have publicly supported the tax understand the issue from the restaurant owners perspective.

“Phil Merry doesn’t have a clue. And you can quote me on that. He doesn’t have a clue. You know, when I get these restaurant guys back together, he should come to hear what they have to say,” York said.

Merry said he has spent many months studying the issue from all sides.

“I believe that I do have a clue. I have more than a clue. I’ve been listening for months and months and months from all walks of life, including those with restaurants. This is about the future of Fort Smith. It’s about an investment in our future,” Merry said.

Merry also noted that others who have researched the issue have also said the 1% prepared food tax is the best option.

“The ad hoc committee, that was comprised of people who are as sharp as a tack and who are, I believe, mostly fiscally conservative, said this was the way to go,” Merry explained.

And if the board enacts the tax without seeking voter approval, York said the restaurant group will go through the process of forcing a ballot vote.

“You betcha,” York said when asked if he would seek to force an election. “I’m really disappointed that they are talking about doing this thing and not putting it on the ballot.”

According to municipal code, a citizen-initiated referendum requires signatures that meet or exceed 15% of the number of votes received by the winner of the most recent mayoral race. Fort Smith Mayor Sandy Sanders received 10,152 votes, meaning a referendum would need 1,523 signatures from legal voters living in Fort Smith.

The signatures must be gathered and the petition submitted to the Fort Smith City Clerk within 30 days of the city board’s passage of the item sought to be referred.

The petition form signed by registered voters also must include the exact language of the ordinance the referendum intends to place on the ballot.

“I would encourage anyone who files a petition work with an attorney to make sure everything is in order,” said City Clerk Sherri Gard.