Effort ‘geared up’ to undo Fort Smith’s 1% restaurant tax

Fort Smith Mayor Sandy Sanders on Thursday (Feb. 24) signed the ordinance enacting a 1% prepared food tax, and, barring a successful citizen-initiated referendum, the tax will go into effect June 1.

The Fort Smith Board of Directors held a special meeting Thursday night for a third reading of the ordinance. After the reading, Sanders signed the ordinance and City Clerk Sherri Gard witnessed and dated the document.

The tax is being enacted to resolve a more than 10-year search to plug an annual deficit predicted to occur when state turnback money dried up. The state turnback program ended for Fort Smith 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.

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 general fund 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.

State law allows only an A&P to collect and manage proceeds of hospitality taxes.
On Feb. 15, the Fort Smith board voted 4-3 to enact the tax by ordinance, and voted 7-0 to enter into a lease agreement with the Fort Smith Advertising & Promotion Commission to manage the convention center.

But Eddie York, owner of Art’s BBQ in Fort Smith, says a group of restaurant owners have their legal ducks in a row and will force the issue to an election. They plan to begin the petition process Friday (Feb. 25).

“We’re geared up. We’ve got everything done and we’re going to start putting out the stuff tomorrow,” York said.

The “stuff” is petition forms York says meet all the legal requirements. The group has 30 days to collect 2,822 signatures of registered Fort Smith voters and to get those signatures certified. York has no doubts they’ll collect far more signatures than needed.

“We’ve got 100 people that can get 50 signatures,” York explained. “I’ve got so people that have called and want to be a soldier for us in this thing. We’re just going to quietly get it done.”

York said those gathering the signatures know the rules, especially the rule that each signature has to be witnessed.

“We’re going to get this thing done the right way, and then we’ll have an election. And I’m telling you that the people are not going to support this tax,” York said.