Fort Smith Board not comfortable with sales tax for water system work

The Fort Smith Board of Directors wants to know more about needed water projects and details of a recent water rate study before calling a special election for a half-cent sales tax to help fund water system improvements.

In April, the Board of Directors approved a drinking water rate study. The city hired 1898 & Co., a division of Burns & McDonnell Engineering, to perform the study. David Naumann, senior project manager with 1898 & Co., presented a study to the board Dec. 12 that included options for raising revenues to cover the projected $367 million needed for projects over the next 5 years. Those options included a 0.50% sales tax and rate increases that raise 50% in revenue through rates in 2024.

The study showed costs for the city over the next five years include $161 million for a 48-inch transmission main line from Lake Fort Smith, $76 million for water treatment plant expansion, $66 million for other main line-related projects, $23 million for meters, and $41 million for “other” work.

City Administrator Carl Geffken said during Tuesday’s (Dec. 19) board meeting the sales tax ordinance could be repealed if directors decided they did not want to ask for the sales tax. He said the expenses facing the water department are for “generational projects” that will hopefully last 100-plus years.

Deputy City Administrator Jeff Dingman said in order to set a special election in March, the ordinance would need to be passed before the first of the year. The state allows for two special election dates in 2024 – one in March and one in November, which is why the ordinances were on the agenda Tuesday night, Dingman said.

Director Lavon Morton said before the board could properly decide on whether a sales tax is needed, it needs to see the entire rate study by 1898 & Co., not just the summary that was presented Dec. 12.

“We need the entire rate study, not a summary. Every board member needs it. We need to see where people use water in the city, so we can absorb the data. Then we need a special study session and to make our own decision,” Morton said.

He also said the utility department needs to “clamp down” on unnecessary spending not directly related to water and consent decree.

“There doesn’t need to be any new equipment (expenditure) without board approval,” Morton said. “I don’t think every hydrant in the city needs to be replaced.”

Morton and Director Kevin Settle also questioned whether the sales tax would be needed for 20 years, which is what was proposed in the ordinance in order to finance bonds. Both said the city should stay away from bonds and either look at state-financed long-term loans or pay-as-you-go projects so bonds can be avoided.

“I like the idea of a sales tax because half is paid for by visitors, which helps citizens. I am not in favor of bonds. Twenty years is too long. I think we put it all before the citizens, so they can trust us,” Settle said. “I really think eight or 10 years, no more than that, is enough.”

The board also said they wanted to look at smaller projects that might be able to alleviate any worries about water pressure without installing the 48-inch transmission line from Lake Fort Smith.