Fort Smith Board commits to 1% cap

story by Luke Hobbs
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In a Tuesday (Oct. 18) business meeting, the Fort Smith Board of Directors approved a resolution stating its commitment to not increase the prepared food tax rate if the tax is approved by voters.

The 1% prepared food tax was originally enacted by the board in February as a solution to an annual deficit with Fort Smith Convention Center operations predicted to occur when $1.8 million in annual state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.

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.

In a series of public forums held recently, opponents of the tax have pointed out that if the tax passes, the board can at any time raise the tax rate from 1% to as high as 3%. According to City Administrator Ray Gosack, the new resolution was a direct response to those comments.

State law allows cities to enact up to a 3% prepared food tax, and Tuesday’s resolution does not prevent the board from raising the tax rate in the future.

The July 28 ordinance included a clause providing that the Board would consider lowering the tax rate within five years. Tuesday’s resolution reaffirms that provision.

In public comments about the resolution, several food tax opponents called it meaningless. Liz Armstrong said, “I would caution the citizens of Fort Smith not to think this resolution means the tax can’t be raised in the future.”

Addressing city directors, David Harris said, “You can change (the tax rate) any way you want to, at any time you want to.”

“All this board can do is what it can do at this time,” responded City Director Philip Merry Jr. “I believe this resolution sends a clear signal to the people that we will not raise this tax.”

Merry called for a note to be given to the next Board of Directors, in January 2013, saying it is the current Board’s will that the tax rate not be raised.

“This (resolution) says we’re committed to keep it at 1%,” said City Director Kevin Settle. “For the A&P to run the convention center and the City to get out of it, this is the only way.”

The vote to approve the resolution was 6-0, with City Director George Catsavis abstaining. Catsavis was the only director to vote against endorsing the tax in the board’s Aug. 16 meeting.

During the discussion about the resolution, Mayor Sandy Sanders noted that the Rodeo Fair Board, which runs Kay Rodgers Park, voted unanimously earlier today to endorse the prepared food tax.