A group of local citizens has come out against a proposed Sebastian county-wide ¼ cent sales tax to support the University of Arkansas at Fort Smith. Sebastian County voters will vote on renewal of the tax in the Nov. 3 general election.
Citizens Against Unfair Taxes opposes what they call a regressive tax that will continue to hurt the elderly and lower income families, said Fort Smith Attorney Joe McCutchen, who represented the group at a press conference held Tuesday (Oct. 6).
When Westark College joined the University of Arkansas system and set to transition to a four-year institution, the college was no longer eligible to receive millage revenue. Sebastian County voters approved a ¼-cent sales tax to go into effect Jan. 1, 2002, the same day the institution became the University of Arkansas at Fort Smith in order to help fund the transition and growth of the university. That sales tax sunsets Jan. 1, 2022. Arkansas Act 1087 of 2013 gave UAFS the authority to request a sales-tax extension for 10 years.
“The purpose of the sales tax was for the transition and growth of UAFS and it was not intended to be a permanent tax. If the tax is extended for another 10 years, it essentially becomes a permanent tax. We are paying it for 30 years,” McCutchen said. “The citizens of Sebastian County have more than fulfilled their obligation.”
According to McCutchen, then University of Arkansas System President Dr. Alan Sugg said in 2002 that the tax should generate about $4 million a year. The sales tax generated $6.29 million for UAFS in 2019. In the first six months of 2020, the tax generated approximately $3.12 million, a 3.8% increase from the $3.02 million generated from the first half of 2019, UAFS Chancellor Dr. Terisa Riley said earlier this year.
“Doing the calculations, the sales tax has generated between $76 million and $114 million for UAFS since 2001 from Sebastian County taxpayers,” McCutchen said. “Hopefully, they have saved some of that money.”
UAFS has used sales tax dollars to help fund many renovations and additions needed for a four-year university, Riley said.
“The residents of Sebastian County voted for the sales tax with the promise that UA-Fort Smith would become a robust, 4-year degree granting university with the facilities, faculty and staff, and academic success programs to support offering bachelor’s degrees. Over the past 20 years, the university has fulfilled the promise made to the taxpayers by creating more than 45 bachelor’s degree programs, and we now offer two master’s degrees in healthcare administration and education. In the past 10 years, the university has conferred more than 13,000 degrees, and approximately 7,000 of those have been bachelor’s degrees,” Riley said.
The funds also have provided the ability to improve and create facilities that are required for four-year degree programs such as laboratories, academic success center, and other outstanding facilities, Riley said. UAFS capital improvement projects made possible by the tax include:
• Baldor Renovation ($231,953)
• Boreham Library Renovation ($769,638)
• Breedlove Renovation ($202,165)
• Gardner Renovation ($955,858)
• Library Volumes ($927, 448)
• Math/Science Renovation ($470,917)
• Vines Renovation ($1,003,812)
• Fullerton Renovation ($176,449)
‘TAXES HIT THE ELDERLY’
McCutchen said it is now time for the university to “tighten its belt” like everyone has had to do in recent years because taxpayers cannot afford to pay as high of taxes as they do. He also said he would like to see where exactly the tax money has been used. Arkansas ranks third among states with the highest average combined state and local sales tax rates, according to The Tax Foundation, McCutchen said.
Arkansas has a state sales tax of 6.5% and allows local governments to collect a local option sales tax of up to 5.5%. There are a total of 266 local tax jurisdictions across the state, collecting an average local tax of 2.158%, according to the Sales Tax Handbook website. There are 33 counties in the state with a sales tax rate of 10% or higher. Sebastian County is one of nine in the state that has a sales tax rate of 9.75%. Saline County has a 9.875% sales tax.
“The people of Fort Smith are struggling with high utility bills, sewage increases, millage and property tax increases, and imminent residential and commercial sanitation rate increases—in addition to the 9.75% regressive sales tax rate in Fort Smith,” McCutchen said, noting the sewer rate in Fort Smith increased 167% from 2015-2017.
Also, the city of Fort Smith sanitation rates rose $1.31 to $14.59 a month the first of October and will go up to $15.89 plus tax a month by the first of 2022.
“The citizens of Fort Smith and Sebastian County are being taxed to death. These regressive taxes hit the elderly and working class the most. We have got to start taking some of these off,” McCutchen said.
‘A SOUND INVESTMENT’
A Fort Smith Regional Chamber of Commerce survey of members taken in August showed that if they were voting today, 85% of respondents would vote for the sales tax. More than 200 responded to the poll with 85% saying they would vote yes and 15% saying they would vote no, said Tim Allen, chamber president and CEO.
The Friends of UAFS, a group in support of the tax, said the tax is an investment in the future of the community and the county.
“I don’t take any tax lightly,” said Michael Barr, chair of the group. “This is a good investment of tax dollars.”
The tax, Barr said, has helped the university grow and offer more certificates, associate degrees, bachelor’s degrees and even master’s degrees in the past 20 years. The number of bachelor’s degrees awarded in a year almost doubled in the past 10 years, going from 419 in 2009-2010 to 826 in 2018-19, Riley said.
And students graduating from the university have “really sound opportunities and career paths. A lot of those opportunities are in Sebastian County,” Barr said. Those students can stay in the area with good careers and raise families, which means they contribute back to the region and help improve the tax base, Barr said.
“We see this as an investment in our kids,” he said. “And it brings a compound return to our investment. It’s a sound investment.”
If voters do not approve an extension, the university would need to cut approximately $6 million from its annual budget of approximately $80 million, Riley has said.
“To put that amount of money into perspective, we spend approximately that amount of money on the College of Business and College of Applied Science and Technology combined each year,” Riley said. “As an institution of higher education, we only have a couple of other ways to make up the funds in our budget.”
One of those ways would be to increase annual tuition and fees paid by all students. To make up the difference, the university would need to increase what students are charged by $1,200 a year, which would add about $5,000 in debt to students at graduation, Riley said. Students graduating from UAFS have about $5,000 less in debt than graduates of peer institutes in Arkansas, she said, citing a U.S. Department of Education college scorecard.
Another way to recoup funds would be to eliminate academic programs, pre-collegiate programs (concurrent enrollment) and student success programs that help students to be retained and graduate from college, Riley said.
McCutcheon said proponents of the tax are engaging in fear mongering by saying tuition would have to be raised.
“There are other ways to make up the funding. We support UAFS; everyone supports UAFS,” McCutchen said. “But it’s time for funding to come from somewhere else. The (University of Arkansas System) needs to come up with funding. We need to get this tax off the books.”