Restaurant group preps for possible signature push

A group of Fort Smith restaurant owners hope to soon secure legal services in the event they need to seek a referendum to reverse a 1% prepared food tax that may be approved by the Fort Smith Board of Directors.

And those legal services will be just one step in collecting

The Fort Smith board is considering the option of a 1% prepared food tax as a funding solution for the Fort Smith Convention Center. 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 2011.

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 Feb. 15, the board is expected to review a contract and management plan between the city and the Fort Smith Advertising & Promotion Commission. State law allows only an A&P to collect and manage proceeds of hospitality taxes.

HE SAID, HE SAID
On Monday (Jan. 31), about 15 restaurant owners and managers gathered at Art’s BBQ  to talk about their options in opposing the 1% tax.

“They (Fort Smith board) are probably going to put this thing (tax) on with a vote of the people,” said Eddie York, owner of Art’s BBQ.

City Director George Catsavis, who was the only director invited to the Monday meeting, confirmed York’s assessment.

“Personally, I feel they have the votes to do it,” Catsavis said of board members who support the 1% tax.

York said he has “good reason to believe” City Director Kevin Settle will attempt to instead force the issue to a vote of the people.

Settle, who opposes the 1% and instead prefers reallocation of the 1% tax used for the city’s street program, said he has committed to no such action.

“I never said I would push it to a vote of the people,” Settle told The City Wire.

BUDGET CUTS
As to other solutions, Catsavis told the restaurant group that the city could find the money “without any problem” if it just cut 1% out of the overall $220 million budget.

City Administrator Ray Gosack said the city budget is not as flexible as some people think. Most of the budget is comprised of obligated funds, to include but is not limited to the $25 million for street work, $35 million for debt service, $45 million for water and sewer projects paid for with bond proceeds, $14 million for the sanitation department, $9.5 million for worker’s comp and the employee wellness fund and $6.5 million for pension programs.

Cuts to find revenue for the convention center would have to come from the city’s about $40 million general fund, Gosack explained. The general fund, which primarily supports police, fire and parks, has seen budget cuts of $4 million – about 10% — in the past three years.

Most of the restaurant owners gathered at Monday’s meeting said they support the convention center, but don’t support a 1% tax. York said he is “bitterly opposed” to any new taxes.

“Look, the 1% is not going to hurt us, the fact is just that it’s another tax,” York said. “We are just taxed to the hilt.”

SIGNATURE PUSH
In the event the city board does enact the 1% by ordinance, the restaurant group agreed Monday to pay for an attorney to follow the necessary legal steps to seek a voter referendum on the issue. The group also talked about raising enough money to run a campaign in the event they force the item to a ballot or the city board puts the 1% on the ballot.

To force a referendum, signatures of registered voters living in Fort Smith 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.

Also, state law requires the collection of 2,822 valid signatures. A previous report on The City Wire quoted city officials as saying 1,524 valid signatures would be needed.

City Attorney Rick Wade said Article 5 of the Arkansas Constitution requires 15% of the legal voters “of any municipality or county may order the referendum or invoke the initiative upon any local measure,” with the 15% tally coming from “the total vote cast for the office of mayor at the last preceding general election.”

In the election between Ray Baker and Sandy Sanders, 18,811 total votes were cast, with 15% rounding up to 2,822.

York encouraged the restaurants owners to put the approved petitions in restaurants, predicting that enough people will be against the 1% and they will be able to quickly gather signatures.

But Jackie Marts, owner of convenience stores in the area and experienced with signature collection, disagreed with York, saying many folks who sign the petitions aren’t residents or registered voters.

“If you need 2,200 (signatures), you better get 5,000 or more,” Marts said during the Monday meeting.

Also, Fort Smith City Clerk Sherri Gard said each signature must be witnessed and each petition sheet requires the signature of the person who witnessed the signatures.

“No, you just can’t leave them out for people to sign as the come and go,” Gard advised.