At a press conference by Citizens Against Unfair Taxes Tuesday (Dec. 14), Fort Smith attorney Joey McCutchen urged the Fort Smith Board of Directors to push back the Feb. 8 special election to renew two sales taxes in the city and to practice transparency in regard to the taxes.
The city board on Nov. 16 voted to approve two sales tax extensions. The first will extend a 0.25% city sales tax from Sept. 20, 2022 to Sept. 20, 2042, to support the fire department and the parks department. That tax generated $5.7 million in 2020. The second would extend a 0.75% sales tax from Jan. 1, 2022, to Dec. 31, 2033, with 83.3% of the revenue going to federal consent decree work on the city’s water and sewer system, and 16.7% directed to the city’s police department. The tax generated $16.99 million in 2020.
McCutchen said there is a right way to ask for a new tax or extend an existing one, which includes complete transparency. He pointed to the millage increase proposed by Fort Smith Public Schools and approved by the voters in May 2018, which was the first millage rate increase in Fort Smith in 31 years and raised the millage rate from 36.5 mills to 42 mills. That election was preceded by many community meetings and panels where citizen input was gathered and used to determine what the proposed millage would be and what the increase would fund. The new rate was estimated to raise $120.82 million, $35 million to go toward district-wide safety improvement, and $13.724 million for a new career and technology center.
McCutchen said the district’s process for asking for a millage increase was the right way to have a tax election and because the citizens felt vested and heard the millage increase was overwhelmingly supported by the voters.
The city needs to learn from that process and be transparent with the voters on the sales tax extensions, what they are asking, how much it will raise and why it needs to happen rather than “forcing it down the citizens’ throats,” he said.
“If we want our voice heard as citizens, it is abundantly clear, we’ve got to vote ‘No’ on Feb. 8 … unless (the city has) the courage to pull (the tax election) down and engage in a transparent process,” McCutchen said.
Talk Business & Politics has asked the city for a response and will update this story if received.
STILL TIME TO ADJUST
He said city leaders want citizens to believe this is an urgent need that has to be approved on Feb. 8, when they have more time. There are still a number of months before the first of the taxes is set to end and more than a year before the second tax is set to end. That time allows city administration and the board of directors to “go back to the drawing board,” meet with citizens and practice complete transparency when it comes to the need of the taxes, how the money will be spent and why this is the best option for raising the funds.
There is no question that infrastructure has to be supported with funds, but the city needs to be open with all the information, he said. They could do that and hold the tax election at a later time in the year, thus giving all citizens the chance to provide input and learn about the need, he added.
Another problem the Citizens Against Unfair Taxes has with the taxes is the length of time each is given. If approved, 0.25% sales tax will be collected for 20 years and the 0.75% will be collected for 10 years, the way the ordinances are now written.
“Why would we approve a tax for 20 years when the city’s capital improvement projects only go out 10 years?” McCutchen said.
CONSENT DECREE UNKNOWNS
He said the city has an appeal in place concerning the consent decree, is owed FEMA money from the historic flooding of the Arkansas River in 2019 and the COVID-19 pandemic that can go towards consent decree work, and is looking at possible grants.
“They are asking for some relief. They have other funding avenues they are pursuing. Who is to say that in five years, the city will need the same amount of money they say they do now for consent decree work,” McCutchen said.
After years of failing to maintain water and sewer infrastructure to federal standards, the city entered into a federal consent decree with the EPA and DOJ in late 2014. The consent decree required the city to make an estimated $480 million worth of sewer upgrades over the course of 12 years. Because of inflation and the state of the city’s sewer system, that number is estimated to be closer to $650 million.
Over the past six years, the city has spent approximately $127 million in capital costs for required improvements added to the $200 million on storage tanks and equalization basins to reduce wet weather sanitary sewer overflows, the basis for the consent decree requirements, spent prior to the consent decree. Utilities Director Lance McAvoy estimates the city will need to spend more than $600 million more in order to complete the necessary work.
In May 2020, the EPA and the Arkansas Department of Environmental Quality (ADEQ) agreed that the city has proved that the sewer improvement program will be “inordinately expensive, accordingly, qualified for an additional five years of implementation time.” The city received an additional five years added to the 12 in the order to implement changes. Because almost six years have passed, that means the city has 11 years to complete the improvements, said Paul Calamita, with Richmond, Va.-based AquaLaw, the firm hired by the city to help with legal relief.
Along with the five-year extension, the EPA and ADEQ agreed to provide additional flexibility with certain interim program deadlines that will allow Fort Smith the ability to stretch out expensive system improvements over the whole of the remaining program implementation schedule, according to the update to the decree provided by the city in 2020.