Trust, new plans part of 1% tax forum

story by Michael Tilley
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Unlike the first two forums about the 1% prepared food tax, a Monday (Oct. 17) night event at Southside Baptist Church in Fort Smith was civil, with speakers for the two sides agreeing that city government could benefit from more citizen involvement.

The first forum, held Oct. 12, saw a member of the audience make a statement against the 1% tax and storm out of the meeting. The second meeting featured relatively animated confusion over the cost per person of the tax and the history of hospitality tax collection increases in Fort Smith.

Monday’s forum was hosted by the Fort Smith Neighborhood Coalition. About 50 attended, including Fort Smith City Directors Philip Merry Jr., Kevin Settle, Steve Tyler and Pam Webber.

BRIEF TAX HISTORY
A 1% prepared food tax was originally enacted by the board in February as a solution to an annual deficit with Fort Smith Convention Center operations predicted to occur when $1.8 million in annual state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, and would allow the center to be managed by the Fort Smith Advertising & Promotion Commission (A&P) instead of the city.

The board changed direction on the tax after months of public uproar. 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. Fort Smith board members have said the tax, if approved Nov. 8, would be brought before voters again in five years to give them a chance to approve of how the effort is being managed.

TRUST THEME
Liz Armstrong, speaking against the tax, said the issue boils down to trusting the city and Fort Smith Advertising & Promotion Commission to be responsible with proceeds of the 1% prepared food tax. She said the A&P has not been clear with a plan on how to spend the money, and the Fort Smith Board of Directors sought to push the tax without a vote.

“We lost faith and trust in our local government,” Armstrong said, noting that an ad hoc committee established to review the convention center funding issue said the public should vote on the issue. (The ad hoc group also said the 1% prepared food tax, along with a merger of the convention center and A&P was the best funding solution for the convention center.)

Continuing, she said if the 1% is approved, the city board, according to state law, may raise the tax to 3% without a vote.

“They are always going to want more. It can go to 3% without the vote of the citizens. I think that is way to high for us,” Armstrong said.

Armstrong said she is not against the Fort Smith Convention Center, but believes more accountability and efficiency in local government should be pursued before a tax is implemented.

NEW BUSINESS PLAN
Former Fort Smith City Director Gary Campbell, speaking for the tax, said he initially opposed a 1% prepared food tax. He said his research found that Fort Smith needed the tax to best compete with other cities for convention business.

Campbell said convention center business brings “new wealth to Fort Smith” because people from out of town spend money at restaurants and local shops. He also said programs at the convention center’s performing arts theatre helps recruit doctors and business executives to the region.

He also said that in the past the convention center was not allowed to reach its full potential because of management rules established by the Fort Smith Board of Directors. But, if a 1% tax is approved, the management will improve, he said.

“We now have a new sheriff in town,” Campbell said of management by Claude Legris, executive director of the Fort Smith A&P Commission, and his staff. “Quite frankly, if we didn’t have a new business plan, I wouldn’t be supporting it.”

OTHER COMMENTS
• When asked about impact of the convention center, Armstrong suggested that taxpayer support of the center has hurt other venues in the city. She said Kay Rodgers Park, home to the Arkansas Oklahoma State Fair and the Old Fort Days Rodeo, did better before other venues popped up in the city, because people were once “willing to go out and sweat” to hear a concert at Kay Rodgers Park.

• Campbell noted that only four of the 28 Arkansas cities with a prepared food tax implemented the tax through a public vote. The other 24 cities enacted the tax by a board/council ordinance.

• Armstrong said the A&P has never said if it will keep a separate accounting for the 1% prepared food tax and the 3% lodging tax already on the books. Legris, who attended the event, said the business plan is to keep the accounting for the collections on separate ledgers.