Fort Smith Board calls for 2030 election on police, street tax portion of sales taxes

The Fort Smith Board of Directors on Tuesday (May 6) voted unanimously to direct the city hold a sales tax election in 2030 to give voters a chance to reauthorize portions of sales taxes that are part of a May 13 election to reallocate sales tax revenue to support consent decree funding.

A 2030 election would be held with the regular Arkansas primary election cycle.

The board on Feb. 21 voted on a sales tax reallocation plan to fund $360 million of federally-mandated sewer system improvements. Following are the three parts of the proposed tax plan. Voters are asked to vote for or against each of the three items. All three items must be approved before the plan can be implemented.
• Reallocation of a 0.75% sales tax first approved by voters in 2022 to pay for consent decree work and to pay bonds, with 0.125% used for the Fort Smith Police Department
• Renewing the 1% street tax but reallocating 0.625% for streets, bridges and drainage work, with the remainder of the tax to fund consent decree work and bonds
• Approval of the authorization to use the tax revenue to issue bonds to pay for the work.

THE CONSENT DECREE
After several decades of failing to maintain the sewer system, officials with the U.S. Environmental Protection Agency and the U.S. Department of Justice filed a consent decree in 2014 with the City of Fort Smith that required certain improvements to the city’s sewer system.

While estimates vary, the consensus estimate is that the total cost could approach $800 million. According to city information, the city spent around $49 million prior to enactment of the consent decree, and spent $87 million on consent decree work between 2015 and 2019. Between 2020 and 2023, the city spent $64.1 million on consent decree work. The total for the work, including prior to 2015, is around $200 million.

2030 VOTE RESOLUTION
After community input following the Feb. 21 vote to set the election, several board members sought to separate sales tax revenue for the police department and the street tax – which sunsets every 10 years for voter reauthorization – from the 30-year term required for the remainder of the sales tax revenue to fund the bond issuance.

“However, that may leave the 1/8-cent sales tax used for Police Department funding and the 5/8-cent sales tax used for streets, bridges and drainage subject to reauthorization by the voters in 2030, the same year the 1/4-cent tax split evenly between Parks & Fire are scheduled to sunset,” according to a city memo on the proposed 2030 vote. “This action would align all available allocations of available sales and use taxes not dedicated to debt service to the same reauthorization schedule.”

City Director Neal Martin said the resolution is an example of listening to the citizens. He also called on Walter Echols to explain how the citizen-led Sales Tax Review Committee provides independent oversight about how tax proceeds are spent. Echols, chairman of the committee, told the board that tax proceeds and how they are spent are “vigorously reviewed with lots of discussion” in the committee’s quarterly meetings. Echols told Talk Business & Politics in a brief interview that they have “never seen anything out of line” with the use of taxes.

City Director Kevin Settle said the tax plan proposed is in response to public pressure to fully address the mandated consent decree work.

“The public has asked this board to fix the consent decree, get it done and get it out of our way. We have a solution in hand, and it costs us no rate increase, no sales tax increase to the public,” Settle said.

Former City Director Lavon Morton, who has taken the lead in pushing for voter approval of the sales tax plan, said after the board’s vote on Tuesday that the 2030 vote on the police and street tax portion is a good move. He even thanked Fort Smith attorney Joey McCutchen, who is leading an effort to oppose the tax plan, for pushing the board to call for the 2030 vote.

“That (police and street tax portion) was something that was in there because of how things were tied together in the original ordinances. So I think the board took a good step that put those things back in front of the voters earlier, and that’s where they should be. … And I want to give Joey McCutchen credit for bringing that to our attention,” Morton said.

McCutchen said he and the group Citizens Against Unfair Taxation will continue to lobby citizens to vote against the sales tax reallocation plan. He said there is a “trust deficit” with the city, adding that the 2030 vote should have been included in the original sales tax reallocation plan approved Feb. 21.

“I think the bottom line is that the city can’t be trusted. They’ve gone back on their promises of 2022. … They just can’t be trusted with our tax dollars, so why would we give them (more money). It’s just more gamesmanship by the city and no leadership,” McCutchen said.