Police, parks to take hit if 1% tax fails

A $317,900 cut to the Fort Smith Police Department and $202,600 in the city’s Parks Department are some of the cuts proposed to help cover Fort Smith Convention Center funding in the event voters reject a 1% prepared food tax.

Fort Smith City Administrator Ray Gosack sent late Friday (Aug. 26) a 7-page document to Mayor Sandy Sanders and the Fort Smith Board of Directors that identifies staff recommendations on finding $800,000 in the city’s general fund budget to “cover operations and a modest capital reserve fund” at the convention center.

A 1% prepared food tax was originally enacted by the board in February as a solution to an annual deficit with Fort Smith Convention Center operations predicted to occur when $1.8 million in annual state turnback money dried up. The state turnback program—which supported expansion or construction of tourism facilities — ended for Fort Smith in June 2010. The center has since operated on a reserve fund. A 1% prepared food tax is estimated to raise about $1.8 million annually.

The board changed direction on the tax after months of public uproar, which included a petition drive to force the tax to an election and a court hearing that essentially overturned the city’s rejection of the petition drive. In a July 28 special meeting, the board unanimously voted to repeal the original food tax ordinance, re-enact the tax, and send the measure to voters in a Nov. 8 special election.

During an Aug. 16 meeting, the board voted 6-1 to encourage voters to support the 1% prepared food tax.

Following are the specific staff recommendations.
• Eliminate outside agency funding: $202,700
Each year, a portion of the City’s general fund is allocated to provide funding for outside groups whose work benefits the community. These groups are divided into three categories — Recreation, Arts & Humanities, and Social/Community Services. The amount of total funding for outside agencies has been cut in recent budgets. In 2010 and previous years, the City provided around $227,000 for outside agencies; in 2011, the allocation was only $202,700.

• Police funding: $317,900
Cuts in this area would eliminate four full-time patrol officers, convert airport security to part-time posts, eliminate a cadet position and cut a part-time communications officer.

• Parks funding: $202,600
Cuts in this budget include $56,900 to cut part-time community center staffing, $25,500 to cut two part-time workers for downtown facilities, and $25,000 tied to recreation programming.

• Library funding: $46,000
This cut reflects the reduction of countywide sales tax proceeds from 6% to 5.7%.

• Senior services budget: $30,800
This cut reflects the reduction of countywide sales tax proceeds from 1.5% to 1.3%.

City staff also recommended $307,100 in “alternative adjustments” to give directors options. The alternative cuts include reducing allocation of countywide tax proceeds for downtown projects from 3% to 2% ($153,000) and cutting three Fire Department positions ($115,800). (Link here to the PDF document from Gosack to the Board of Directors.)

Gosack reminded the board that city staff has made “countless budget cuts since 2008” to respond to $2.7 million in declining sales tax and franchise tax revenue. Directors in 2010 approved more than $1.43 million in cuts to respond to revenue shortfalls. The biggest cut was a $717,000 reduction in payments to the city’s health & wellness fund. The cuts in 2010 and pushed forward into 2011 also include a decrease of about 28 full-time positions, and a $790,000 proposed cut to payments into the health & wellness fund.

“The adjustments necessary to operate the convention center will be much deeper than what we’ve had to make in the past. They will affect services in ways that most citizens will notice. Decisions about which services to reduce are never easy to make. The staff has used its best professional judgment to identify cuts that won’t affect core services,” Gosack noted.

Funding for the convention center can only come from the city’s general fund, which is about $42 million annually.

“We have been cutting police and fire the last four budget years, because of the downturn in our general fund revenue,” Gosack said when asked how he would respond to those who say cutting the police budget is a scare tactic. “But the police department is about 40% of the general fund, so we can’t make cuts to the general fund without touching the police budget. … There is no fat left to cut away.”

A criticism of the prepared food tax is that it will raise about $1.8 million to fund an estimated $800,000 to $1 million annual shortfall. Gosack said the prepared food tax revenue would allow the Fort Smith Advertising & Promotion Commission to adequately support and market the facility.

“It ($800,000) doesn’t allow us to bring in more entertainment. It doesn’t allow us to address capital needs at the convention center, like the parking problem,” Gosack said. “It’s basically a bare-bones budget, and if we want to continue having the same criticisms of the convention center that we’ve had in the past, this budget will accomplish that.”

Claude Legris, executive director of the Fort Smith Advertising and Promotion Commission, said revenue from the 1% prepared food tax would allow for better use and marketing of the convention center.

“I haven’t heard a whole lot of people say I love the convention center the way it is right now,” Legris said. “We have a lot of efficiencies we want to find, but the goal is to boost business. And we can’t bring more business into the building and cut expenses at the same time. You just can’t do that.”

Legris said a prepared food tax would support enhanced marketing, to include a new ticketing system, website and more national advertising. The revenue would also allow for adequate funding of a capital reserve budget, parking lot construction and reduce rental rates required to spur more activity, Legris added.

“We wouldn’t be able to pursue these other ideas and build up the reserve with just that ($800,000),” Legris said.

A $1.4 million “austerity budget” is in place for 2012, Legris said. The budget includes $550,000 in estimated revenue, meaning the 2012 shortfall is estimated at $850,000.

In addition to the Nov. 8 vote on the 1% prepared food tax, Fort Smith voters are likely to consider in spring/summer 2012 a 1% refinancing of wet weather sewer bonds that may include financing for construction of a new fire station and purchases of Fire Department vehicles.

Renewal of the 1% countywide sales tax is scheduled for 2014, and renewal of the 1% Fort Smith street tax will be before voters in 2015.