Fort Smith board approves 1% tax collection process

The Fort Smith Board of Directors voted 6-1 on Tuesday to approve a plan for collection of the 1% prepared food tax that will become effective June 1.

City Director George Catsavis was the only director to vote against the ordinance that prescribes how the tax will be collected and enforced. The ordinance approves the rules by which the Fort Smith Advertising & Promotion Commission will collect and regulate the tax. The rules include a provision in which the finance department of the city of Fort Smith is paid to collect the tax and direct the revenue to the A&P Commission.

A 1% prepared food tax to support operations and programming at the Fort Smith Convention Center has certainly proven controversial.

The tax was enacted Feb. 24 by the Fort Smith Board of Directors to resolve a more than 10-year search to plug an annual deficit predicted to occur when state turnback money dried up. The state turnback program ended for Fort Smith in June 2010 from which the city received about $1.8 million a year. Barring a successful citizen-initiated referendum, the tax will go into effect June 1.

On Mar. 26, about 4,460 signatures were submitted to Gard for sufficiency determination. The effort needs 2,822 valid signatures (registered voters in Fort Smith) to push the 1% prepared food tax to a public vote.

On April 1, Gard informed organizers of the petition drive of two problems — no ballot title was submitted with the petitions, and each petition sheet did not have attached a copy of the ordinance sought to be referred. Gard based part of her decision on input from City attorney Jerry Canfield, who cited legal precedent in his recommendation to reject the petitions.

Gard ruled April 25 that the petition was insufficient.

Gard’s investigation, including interviews and testimony from several persons who gathered petitions, found that “at least” 1,409 of the 3,363 signatures verified as legal voters “cannot be accepted as verified inasmuch as those affiants have confirmed that there were signatures that they did not personally witness.”

Brian Meadors, an attorney representing petition organizers has said he will file a lawsuit to reverse Gard’s decision. Meadors has until May 25 to file the action.

Catsavis asked Tuesday (May 3) what the repercussions would be if the Fort Smith A&P Commission collected the tax and then the courts ruled in favor of the petition organizers.

City Attorney Jerry Canfield said there is “some risk” on expenditures of the tax collections, but said the risk would be encumbered by the A&P Commission.

“I believe it is an issue for the (A&P) commission,” Canfield responded.

Claude Legris, executive director of the Fort Smith A&P, said the organization would soon begin a series of “information sessions” with restaurant owners and others required to collect the prepared food tax.

“What we want to do is provide for as smooth a transition as possible,” Legris explained to the board.